N-6/A 1 d839441dn6a.htm JHUSA A - ACCUM 19 JHUSA A - Accum 19
Table of Contents
As filed with the U.S. Securities and Exchange Commission on December 16, 2019
Registration No. 333-233647
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-6
SEC File No 811-4834
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 95 [X]
John Hancock Life Insurance Company (U.S.A.) Separate Account A
(Exact Name of Registrant)
John Hancock Life Insurance Company (U.S.A.)
(Name of Depositor)
200 Berkeley Street
Boston, MA 02116
(Complete address of depositor’s principal executive offices)
Depositor's Telephone Number: 617-572-6000
JAMES C. HOODLET
John Hancock Life Insurance Company (U.S.A.)
U.S. INSURANCE LAW
200 BERKELEY ST.
BOSTON, MA 02116
(Name and complete address of agent for service)
Approximate Date of Proposed Public Offering: As soon as practicable following effectiveness of this registration statement.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
Pursuant to the provisions of Rule 24f-2, Registrant has registered an indefinite amount of the securities under the Securities Act of 1933.

Table of Contents
Prospectus dated December 16, 2019
for interests in
John Hancock Life Insurance Company (U.S.A.) Separate Account A
Interests are made available under
Accumulation Variable Universal Life 2019
a flexible premium variable universal life insurance policy with indexed accounts
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
(“John Hancock USA”)
The policy provides the following variable investment accounts:
500 Index
Active Bond
American Asset Allocation
American Global Growth
American Growth
American Growth-Income
American International
Blue Chip Growth
Capital Appreciation
Capital Appreciation Value
Core Bond
Emerging Markets Value
Equity Income
Financial Industries
Fundamental All Cap Core
Fundamental Large Cap Value
Global
Global Bond
Health Sciences
High Yield
International Equity Index
International Small Company
International Value
Investment Quality Bond
Lifestyle Balanced
Lifestyle Conservative
Lifestyle Growth
Lifestyle Moderate
Managed Volatility Aggressive
Managed Volatility Balanced
Managed Volatility Conservative
Managed Volatility Growth
Managed Volatility Moderate
Mid Cap Index
Mid Cap Stock
Mid Value
Money Market
PIMCO VIT All Asset
Real Estate Securities
Science & Technology
Select Bond
Short Term Government Income
Small Cap Index
Small Cap Opportunities
Small Cap Stock
Small Cap Value
Small Company Value
Strategic Income Opportunities
Total Bond Market
Total Stock Market Index
Ultra Short Term Bond
The policy also provides for the following general account options:
Fixed Option Index-Linked Interest Options
The fixed account Base Capped Indexed Account
Base High Par Capped Indexed Account
* * * * * * * * * * * *
Please note that the Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, you may no longer receive paper copies of the shareholder reports for the Portfolios offered through your John Hancock life insurance policy unless you specifically request paper copies from John Hancock. Instead, the shareholder reports will be made available on a website, and you will be notified by mail each time reports are posted and be provided with a website link to access those reports. If you have already elected to receive shareholder reports electronically, you will not be affected by this change, and you do not need to take any action.
Alternatively, you may request to receive reports in paper, free of charge, at any time, by calling John Hancock at 800-827-4546. Your election to receive reports in paper will apply to all Portfolios offered within your life insurance policy.

 

GUIDE TO THIS PROSPECTUS
This prospectus provides a description of the material rights and obligations under your policy. This prospectus is arranged in the following way:
•  Starting on the next page is a Table of Contents for this prospectus.
•  The section after the Table of Contents is called “Summary of Benefits and Risks.” It contains a summary of the benefits available under the policy and of the principal risks of purchasing the policy. You should read this section before reading any other section of this prospectus.
•  Behind the Summary of Benefits and Risks section is a section called “Fee Tables” that describes the fees and expenses you will pay when buying, owning and surrendering the policy.
•  Behind the Fee Tables section is a section called “Detailed Information.” This section gives more details about the policy. It may repeat certain information contained in the Summary of Benefits and Risks section in order to put the more detailed information in proper context.
•  Finally, on the back cover of this prospectus is information concerning the Statement of Additional Information (the “SAI”) and how the SAI, audited financial statements for John Hancock USA and the Separate Account, personalized illustrations and other information can be obtained.
Prior to making any investment decisions, you should carefully review this product prospectus and all applicable supplements. In addition, you will receive the prospectuses for the underlying funds that we make available as investment options under the policies. The funds' prospectuses describe the investment objectives, policies and restrictions of, and the risks relating to, investment in the funds. In the case of any of the portfolios that are operated as feeder funds, the prospectus for the corresponding master fund is also provided. If you need to obtain additional copies of any of these documents, please contact your John Hancock USA representative or contact our Service Office at the address and telephone number on the back page of this product prospectus.
The Standard & Poor’s 500 Composite Stock Price Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”), and has been licensed for use by the Company. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by the Company. The indexed universal life insurance product issued by the policy is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product nor do they have any liability for any errors, omissions, or interruptions of the Standard & Poor’s 500 Composite Stock Price Index.
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SUMMARY OF BENEFITS AND RISKS
The nature of the policy
The policy's primary purpose is to provide lifetime protection against economic loss due to the death of the insured person. The policy is unsuitable as a short-term savings vehicle because of the substantial policy-level charges. We are obligated to pay all amounts promised under the policy.
You may choose to allocate your policy value to one or more variable investment accounts. The variable investment accounts are subaccounts of John Hancock Life Insurance Company (U.S.A.) Separate Account A (“Separate Account”), a separate account operated by us under Michigan law. Each subaccount invests exclusively in an underlying portfolio and, as result, policy value allocated to a variable investment account will vary with the positive or negative investment experience of its underlying portfolio. You may also allocate policy value to the two index-linked interest options offered under this policy referred to as the Base Capped Indexed Account and the Base High Par Capped Indexed Account (collectively, the “indexed accounts”). The indexed accounts credit interest based upon changes in the Standard & Poor's 500® Composite Stock Price Index (“S&P 500”), excluding dividends, and the application of rates and caps associated with each indexed account (see “The indexed accounts”). If you seek a fixed return on your policy, you can allocate policy value to the fixed account, which credits a rate of interest declared by us. The indexed accounts and the fixed account are part of our general account. The amount we pay to the policy's beneficiary on the death of the insured person (we call this the “death benefit”) may also vary based on the performance of the variable investment accounts or the indexed accounts.
We call the investments you make in the policy “premiums” or “premium payments.” The amount we require as your first premium payment depends upon the specifics of your policy and the insured person. Except as noted in the “Detailed Information” section of this prospectus, you can make any other premium payments you wish at any time. That's why the policy is called a “flexible premium” policy.
In your application for the policy, you will tell us how much life insurance coverage you want on the life of the insured person. This is called the “Total Face Amount.” Total Face Amount is comprised of the Base Face Amount and any Supplemental Face Amount you elect based on your individual needs and objectives. Some of these considerations are discussed under “Base Face Amount vs. Supplemental Face Amount” in this prospectus. However, you should discuss your insurance needs and financial objectives with your registered representative before purchasing any life insurance product. You should also consider that the amount of compensation paid to the selling broker-dealer will generally be less if you elect greater portions of Supplemental Face Amount coverage.
If the life insurance protection described in this prospectus is provided under a master group policy, the term “policy” as used in this prospectus refers to the certificate we issue and not to the master group policy.
Summary of policy benefits
Death benefit
When the insured person dies, we will pay the death benefit minus any policy debt and unpaid fees and charges. There are two ways of calculating the death benefit (Option 1 and Option 2). You choose which one you want in the application. The two death benefit options are:
•  Option 1 - The death benefit will equal the greater of (1) the Total Face Amount plus any amount payable under a supplementary benefit rider, or (2) the minimum death benefit (as described under “The minimum death benefit” provision in the “Detailed Information” section of this prospectus).
•  Option 2 - The death benefit will equal the greater of (1) the Total Face Amount plus any amount payable under a supplementary benefit rider, plus the policy value on the date of death, or (2) the minimum death benefit.
Surrender of the policy
You may surrender the policy in full while the Insured is alive. If you do, we will pay you the policy value less any outstanding policy debt and less any applicable surrender charge (see “Surrenders”). This is called your “net cash surrender value.” You must return your policy when you request a surrender.
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Withdrawals
After the first policy year, you may make a withdrawal of part of your net cash surrender value. Generally, each withdrawal must be at least $500. Your policy value is automatically reduced by the amount of the withdrawal. A withdrawal may also reduce the Total Face Amount (see “Surrender and withdrawals—Withdrawals”). We reserve the right to refuse any withdrawal that would cause the policy's Base Face Amount to fall below $50,000.
Policy loans
If your policy is in force and has sufficient policy value, you may borrow from it at any time by completing the appropriate form. Generally, the minimum amount of each loan is $500. The maximum amount you can borrow is determined by a formula as described in your policy. Interest is charged on each loan. You can pay the interest or allow it to become part of the outstanding loan balance. You can repay all or part of a loan at any time. If there is an outstanding loan when the insured person dies, it will be deducted from the death benefit. Policy loans permanently affect the calculation of your policy value, and may also result in adverse tax consequences.
Optional supplementary benefit riders
When you apply for the policy, you can request any of the optional supplementary benefit riders that we make available. Availability of riders varies from state to state. Charges for most riders will be deducted monthly from the policy value. Some riders may not be available in combination with other riders or benefits (see “Other policy benefits, rights and limitations— Optional supplementary benefit riders you can add”).
Tax benefits
You can transfer Policy Value money from one investment account to another without tax liability. Moreover, any dividends and capital gains distributed by each underlying portfolio of the variable investment accounts are automatically reinvested and reflected in the portfolio’s value and create no taxable event for you. If and when policy earnings are distributed (generally as a result of a surrender or withdrawal), they will be treated as ordinary income instead of as capital gains. Also, you must keep in mind that you are purchasing an insurance policy and you will be assessed charges at the policy level as well as at the fund level. Such policy level charges, in aggregate, are significant and will reduce the investment performance of your policy (see “Tax considerations”).
Summary of policy risks
Lapse risk
If the net cash surrender value is insufficient to pay the charges when due and the No-Lapse Guarantee is not in effect, your policy can terminate (i.e. “lapse”). For example, this can happen because you haven't paid enough premium, because the investment performance of the variable investment accounts you’ve chosen has been poor, because the performance of the S&P 500 has been poor, or because of a combination of all factors. Since withdrawals reduce your policy value, withdrawals increase the risk of lapse. Policy loans also increase the risk of lapse. You will be given a “grace period” within which to make additional premium payments to keep the policy in force. If lapse occurs, you may be given the opportunity to reinstate the policy by making the required premium payments and satisfying certain other conditions (see “Lapse and reinstatement”).
There is no guarantee that your policy will not lapse even if you pay your planned premium.
Investment risk
Variable investment accounts
The policy offers a number of variable investment accounts, as listed on page 1 of this prospectus. The investment performance of any variable investment account may be good or bad. Your policy value will increase or decrease based on the investment performance of the variable investment accounts you’ve chosen. The variable investment accounts cover a broad spectrum of investment styles and strategies, some variable investment accounts are riskier than others. These risks (and potential rewards) are discussed in detail in the prospectuses of the underlying portfolios. The Death Benefit may also increase or decrease with investment experience.
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Risks associated with indexed accounts
Amounts allocated to the indexed accounts are designated to a segment of the indexed account on the “segment initiation date,” which is generally the 15th of each month. A segment is twelve-months in duration (“segment term”) and is eligible to receive interest credit (“index segment interest credit”) on the “segment maturity date,” which is the last day of the segment. You may participate in a segment by making an allocation to an indexed account prior to the “lock in date” for that segment, which is three business days prior to the segment initiation date. After the lock in date, however, you may not allocate additional amounts to that segment.
The index segment interest credit will vary based upon the performance of the S&P 500 (excluding dividends) subject to the application of the participation rate, the segment cap rate and the guaranteed segment floor rate (“indexed account parameters”) (see “The indexed accounts”). The segment cap rate limits the rate that is used in calculating the index segment interest credit. The participation rate is a percentage of a positive index change that we use to calculate the index segment interest credit for a segment. If the S&P 500 on the segment maturity date has not increased in value from the segment initiation date by an amount beyond the guaranteed segment floor rate, which is 0.25%, we will credit interest at the guaranteed segment floor rate. You bear the risk that performance of the S&P 500 may result in index segment interest credits that are low enough to require you to increase your premium payments in order to keep your policy in force.
It is within our discretion to set the segment cap rate and participation rate for any new segment term, subject to their respective guaranteed rates (see “The indexed accounts”). Once a segment is designated, the segment cap rate and the participation rate are guaranteed for that segment term. If we reduce the segment cap rate or the participation rate for future segment terms, the amount of index segment interest credit which you may have otherwise received would be reduced and you may need to increase your premium payments in order to keep your policy in force. If the S&P 500 on the segment maturity date has increased from the segment initiation date by a percentage that exceeds the segment cap rate for the segment term, the indexed segment interest credit applied to the indexed account for that segment will be limited to the segment cap rate.
Withdrawals from an indexed account will reduce the amount of any index segment interest credit for any impacted segment (see “Withdrawals”), as we will not credit any interest on any amount that does not remain in the segment for its full term. If a policy terminates before a segment maturity date due to death of the insured, surrender of the net cash surrender value or insufficient premium, no index segment interest credit will be applied for that segment. Amounts allocated to an indexed account are subject to a lock out period following a withdrawal (that is not a systematic withdrawal) from a segment. Transfers from an indexed account to another indexed account, a variable investment account or a fixed account can only be made on the segment maturity date (see “Limitations on transfers to and from an indexed account”).
We may add additional indexed accounts from time to time, cease to offer any indexed account or close the indexed accounts to new allocations and transfers. We also reserve the right to substitute the S&P 500 for another external index; any substitution will apply to new segments only. If we substitute the S&P 500 with another external index, the indexed account will continue to offer the guaranteed indexed account parameters shown in the Policy Specifications. Any open segments in the indexed accounts will remain until they mature after which the segment proceeds will automatically be transferred to the fixed account, unless you request in writing that the segment proceeds be transferred to an available indexed account. The performance of the new index may differ from that of the S&P 500, which may affect the amount of the index segment interest credit. In the event that we decide to substitute the S&P 500 or we cease to offer an indexed account, we will notify you and any assignee of record in advance of the change at your last known addresses.
Allocating amounts to an indexed account is not an investment in the stock market or any securities index, including the S&P 500. As a result, you will have no ownership rights in the underlying stocks comprising the S&P 500, such as voting rights, dividend payments, or other distributions. Further, we are not affiliated with the S&P 500 or the underlying stocks comprising the S&P 500.
Transfer risk
There is a risk that you will not be able to transfer your policy value from one variable investment account to another because of limitations on the dollar amount or frequency of transfers you can make. The limitations on transfers out of the fixed account are more restrictive than those that apply to transfers out of variable investment accounts. If you purchase the Long-Term Care Rider, while benefits are being paid under that rider you will be subject to special transfer restrictions (see “Optional supplementary benefit riders you can add”). Transfers from an indexed account to any other account can only be made on a segment maturity date.
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Early surrender risk
There are surrender charges assessed if you surrender your policy in the first fifteen policy years. Depending on the policy value at the time you are considering surrender, there may be little or no surrender value payable to you.
Upon surrender, we will not apply index segment interest credits to any segments which have not reached their segment maturity date.
Market timing and disruptive trading risks
The policy is not designed for professional market timers or highly active traders, including persons or entities that engage in programmed, large or frequent transfers among the variable investment accounts, between the variable investment accounts, fixed account or indexed accounts. The policy is also not designed to accommodate trading that result in transfers that are large in relation to the total assets of the underlying portfolio.
To discourage market timing and disruptive trading activity, we impose restrictions (see “Market timing and disruptive trading practices”) on transfers and reserve the right to change, suspend or terminate telephone, facsimile and internet transaction privileges (see “How you communicate with us”).
While we seek to identify and prevent disruptive trading activity, it may not always be possible to do so. Therefore, no assurance can be given that the restrictions we impose will be successful in preventing all disruptive trading and avoiding harm to long term investors.
Tax risks
Life insurance death benefits are ordinarily not subject to income tax. Other Federal and state taxes may apply as further discussed below. In general, you will be taxed on the amount of lifetime distributions that exceed the premiums paid under the policy. Any taxable distribution will be treated as ordinary income (rather than as capital gains) for tax purposes. If you have elected the Long-Term Care Rider, the Healthy Engagement Rider or the Critical Illness Rider, please see the section of the prospectus entitled “Tax considerations” for a description of certain tax risks associated with that rider.
In order for you to receive the tax benefits extended to life insurance under the Internal Revenue Code, your policy must comply with certain requirements of the Code. We will monitor your policy for compliance with these requirements, but a policy might fail to qualify as life insurance in spite of our monitoring. If this were to occur, you would be subject to income tax on the income credited to your policy for the period of disqualification and all subsequent periods. The tax laws also contain a so-called “7 pay limit” that limits the amount of premium that can be paid in relation to the policy’s death benefit. If the limit is violated, the policy will be treated as a “modified endowment contract,” which can have adverse tax consequences. There are also certain Treasury Department rules referred to as the “investor control rules” that determine whether you would be treated as the “owner” of the assets underlying your policy. If that were determined to be the case, you would be taxed on any income or gains those assets generate. In other words, you would lose the value of the so-called “tax-deferred inside build-up” that is a major benefit of life insurance.
There is a tax risk associated with policy loans. Although no part of a loan is treated as income to you when the loan is made unless your policy is a “modified endowment contract,” surrender or lapse of the policy with a loan outstanding would result in the loan being treated as a distribution at the time of lapse or surrender. This could result in a considerable tax bill. Under certain circumstances involving large amounts of outstanding loans and an insured person of advanced age, you might find yourself having to choose between high premium requirements to keep your policy from lapsing and a significant tax burden if you allow the lapse to occur.
Tax consequences of ownership or receipt of policy proceeds under Federal, state and local estate, inheritance, gift and other tax laws can vary greatly depending upon the circumstances of each owner or beneficiary. There can also be unfavorable tax consequences on such things as the change of policy ownership or assignment of ownership interests. For these and all the other reasons mentioned above, we recommend you consult with a qualified tax adviser before buying the policy and before exercising certain rights under the policy.
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FEE TABLES
This section contains tables that describe all of the fees and expenses that you will pay when buying, owning and surrendering the policy. In the first three tables, certain entries show the maximum charge, the minimum charge and the charge for a representative insured person. Other entries show only the maximum charge we can assess. Except where necessary to show a rate greater than zero, all rates shown in the tables have been rounded to two decimal places as required by prospectus disclosure rules. Consequently, the actual rates charged may be slightly higher or lower than those shown in the tables.
The first table below describes the fees and expenses that you will pay at the time that you pay a premium, surrender the policy, lapse the policy or transfer policy value between variable investment accounts. A portion of the premium charge is used to cover premium taxes. Premium taxes vary by jurisdiction and are subject to change. Currently, premium tax levels range from 0% to 3.5%.
Transaction Fees
Charge When Charge is Deducted Amount Deducted
Premium charge Upon payment of premium 7% of each premium paid in years 1-20
2% of each premium paid in years 21 and thereafter
Surrender charge(1) Upon surrender or policy lapse  
Maximum charge   $59.24 per $1,000 of Base Face Amount
Minimum charge   $4.06 per $1,000 of Base Face Amount
Charge for representative insured person   $24.86 per $1,000 of Base Face Amount
Transfer fee(2) Upon each transfer into or out of a variable investment account beyond an annual limit of not less than twelve $25
    
(1)  A surrender charge is applicable for fifteen policy years from the Policy Date, and varies based upon the sex, issue age and duration, and risk classification of the insured person. The maximum charge shown is the amount in month one in the first policy year for a 90 year old female standard nonsmoker underwriting risk. The minimum charge shown is for a 0 year old female standard nonsmoker underwriting risk. The charge for the representative insured person is for a 45 year old male standard nonsmoker underwriting risk. For more information about the surrender charge, see “Deductions from policy value—Surrender charge.” These charges may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative.
(2)  This charge is not currently imposed, but we reserve the right to do so in the policy.
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The next two tables describe the charges and expenses that you will pay periodically during the time you own the policy. These tables do not include fees and expenses paid at the portfolio level. The second table is devoted only to optional supplementary rider benefits. For more information about the cost of insurance rates and other charges talk to your John Hancock USA representative.
Periodic Charges Other Than Fund Operating Expenses
Charge When Charge is Deducted Amount Deducted
Cost of insurance charge(1) Monthly  
Maximum charge   $83.33 per $1,000 of NAR
Minimum charge   $0.01 per $1,000 of NAR
Charge for representative insured person   $0.22 per $1,000 of NAR
Base Face Amount charge(2) Monthly, for a maximum of 55 years  
Maximum charge   $7.11 per $1,000 of Base Face Amount
Minimum charge   $0.05 per $1,000 of Base Face Amount
Charge for representative insured person   $0.32 per $1,000 of Base Face Amount
Supplemental Face Amount charge(3) Monthly, for a maximum of 55 years  
Maximum charge   $6.325 per $1,000 of Supplemental Face Amount
Minimum charge   $0.01 per $1,000 of Supplemental Face Amount
Charge for representative insured person   $0.02 per $1,000 of Supplemental Face Amount
Administrative charge Monthly $20.00
Asset-based risk charge(4) Monthly 0.02% of policy value
Policy loan interest rate(5) Accrues daily
Payable annually 		3.25%
    
(1)  The cost of insurance charge is determined by multiplying the net amount of insurance for which we are at risk (the net amount at risk or “NAR”) by the applicable cost of insurance rate. The rates vary widely depending upon age at issue, the length of time the policy has been in effect, the insurance risk characteristics of the insured person and (generally) the gender of the insured person. The maximum rate shown is the rate in the third policy year for a 90 year old male substandard smoker underwriting risk. The minimum rate shown is the rate in the first policy year for a 5 year old female standard non-smoker underwriting risk. The representative insured person rate shown is for a 45 year old male standard non-smoker underwriting risk with a policy in the first policy year. These charges may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative.
(2)  This charge is determined by multiplying the Base Face Amount at issue by the applicable rate. The rates vary by the sex, age, and risk classification at issue of the insured person. The charge also varies by policy year. The maximum rate shown is the rate in the first policy year for an 89 year old male standard smoker. The minimum rate shown is the rate in the first policy year for a 0 year old male standard non-smoker underwriting risk. The representative insured person rate shown is for a 45 year old male standard non-smoker. These charges may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative.
(3)  This charge is determined by multiplying the Supplemental Face Amount at issue by the applicable rate. The rates vary by the sex, age, and risk classification of the insured person. The charge also varies by policy year. The maximum rate shown is the rate in the first policy year for a 90 year old male standard smoker. The minimum rate shown is the rate in the first policy year for a 32 year old male super-preferred underwriting risk. The representative insured person rate shown is for a 45 year old male standard non-smoker. These charges may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative.
(4)  This charge is not currently imposed, but we reserve the right do so in the policy. This charge only applies to that portion of policy value held in the variable investment accounts. The charge determined does not apply to any fixed account or indexed account.
(5)  The maximum effective annual interest rate we can charge for the loan account is 3.25% for policy years 1-10 and 2.25% for policy years 11 and thereafter. The minimum interest that the loan account will earn is equal to the difference between the maximum annual interest rate we charge for the loan minus the Maximum Loan Interest Credited Differential. The Maximum Loan Interest Credited Differential is the difference between the annual interest rate we charge for the loan minus the interest rate we credit for the loan,
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however, it will never be greater than 2%. For example, if the annual interest rate we charge for a loan is 3%, we cannot credit interest at a rate less than 1% because the difference between the interest rate charged for the loan and the interest rate credited to the loan cannot be more than the Maximum Loan Interest Credited Differential, which is 2%. Policy value in the variable investment accounts, fixed account, and holding segments for the indexed accounts used as collateral for a loan are transferred to the loan account and credited and charged interest as explained above (see “Policy loans”). Policy value in the indexed accounts used as collateral for a loan is not transferred to the loan account and instead is credited interest in the manner described in “The indexed accounts” section, which is different from interest credited to the loan account (see “Policy loans”). Policy value in the indexed accounts used as collateral for a loan is charged interest at the rate described above.
Rider Charges
Charge When Charge is Deducted Amount Deducted
Healthy Engagement Rider Monthly $2
Critical Illness Benefit Rider (1) Monthly  
Maximum charge   $48.43 per $1,000 of Critical Illness Benefit Amount
Minimum charge   $0.20 per $1,000 of Critical Illness Benefit Amount
Charge for representative insured person   $2.12 per $1,000 of Critical Illness Benefit Amount
Disability Payment of Specified Premium Rider(2) Monthly  
Maximum charge   $198.67 per $1,000 of Specified Premium
Minimum charge   $16.57 per $1,000 of Specified Premium
Charge for representative insured person   $51.66 per $1,000 of Specified Premium
Long-Term Care Rider(3) Monthly  
Maximum charge   $3.34 per $1,000 of NAR
Minimum charge   $0.01 per $1,000 of NAR
Charge for representative insured person   $0.08 per $1,000 of NAR
Long-Term Care Rider 2018(4) Monthly  
Maximum charge   $3.75 per $1,000 of NAR
Minimum charge   $0.01 per $1,000 of NAR
Charge for representative insured person   $0.07 per $1,000 of NAR
Return of Premium Death Benefit Rider(5) Monthly  
Maximum charge   $83.33 per $1,000 of NAR
Minimum charge   $0.02 per $1,000 of NAR
Charge for representative insured person   $0.22 per $1,000 of NAR
Cash Value Enhancement Rider Upon policy issue $500.00
Overloan Protection Rider(6) At exercise of benefit  
Maximum charge   8.00%
Minimum charge   0.04%
Accelerated Benefit Rider(7) At exercise of benefit $150.00
    
(1)  The charge for this rider is determined by multiplying the Critical Illness Benefit Amount by the applicable rate. The rates vary by issue age, duration, gender, and critical illness risk classification of the insured person (e.g., the risk that the insured person will develop a Critical Illness, as defined in the rider). The maximum rate shown is the rate in the sixteenth policy year for a 49-year old male standard smoker underwriting risk. The minimum rate shown is the rate in the second policy year for an 18-year old female standard
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non-smoker underwriting risk. The rate for the representative insured person is the rate in the first policy year for a 45-year old male standard non-smoker underwriting risk. These charges may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative.
(2)  The charge for this rider is determined by multiplying the Specified Premium by the applicable rate. The Specified Premium is stated in the Policy Specifications page of your policy. The rates vary by the sex, issue age and the disability insurance risk characteristics of the insured person. The maximum rate shown is for a 54 year old female substandard smoker underwriting risk. The minimum rate shown is for a 20 year old male standard non-smoker underwriting risk. The representative insured person rate shown is for a 45 year old male standard non-smoker underwriting risk. These charges may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative.
(3)  The charge for this rider is determined by multiplying the net amount of insurance for which we are at risk (the net amount at risk or “NAR”) by the applicable rate. The rates vary by the long-term care insurance risk characteristics of the insured person and the rider benefit level selected. The maximum rate shown is for a 75 year old male substandard smoker underwriting risk with a 4% Monthly Acceleration Percentage. The minimum rate shown is for a 20 year old female super preferred non-smoker underwriting risk with a 1% Monthly Acceleration Percentage, which is a percentage of the death benefit you can accelerate each month. The Monthly Acceleration Percentage is stated in the Policy Specifications page of your policy. The representative insured person rate shown is for a 45 year old male standard non-smoker underwriting risk with a 4% Monthly Acceleration Percentage. These charges may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative.
(4)  The charge for this rider is determined by multiplying the net amount of insurance for which we are at risk (the net amount at risk or “NAR”) by the applicable rate. The rates vary by the long-term care insurance risk characteristics of the insured person and the rider benefit level selected. The maximum rate shown is for a 75-year old female substandard smoker underwriting risk with a 4% Monthly Acceleration Percentage. The minimum rate shown is for a 20-year old male super preferred non-smoker underwriting risk with a 1% Monthly Acceleration Percentage. The representative insured person rate shown is for a 45-year old male standard non-smoker underwriting risk with a 4% Monthly Acceleration Percentage. The Monthly Acceleration Percentage is the percentage of the death benefit you can accelerate each month, and is stated in the Policy Specifications page of your policy. These rates may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative
(5)  The Return of Premium Death Benefit Rider charge is determined by multiplying the net amount of insurance for which we are at risk (the net amount at risk or “NAR”) by the applicable cost of insurance rate. The rates vary widely depending upon the length of time the policy has been in effect, the insurance risk characteristics of the insured person and (generally) the sex of the insured person. The maximum rate shown is the rate in the thirteenth policy year for an 80 year old male substandard smoker underwriting risk. The minimum rate shown is the rate in the first policy year for a 5 year old female standard non-smoker underwriting risk. The representative insured person rate shown is for a 45 year old male standard non-smoker underwriting risk with a policy in the first policy year. These charges may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative.
(6)  The charge for this rider is determined as a percentage of unloaned account value. The rates vary by the attained age of the insured person at the time of exercise. The rates also differ according to the tax qualification test elected at issue. The maximum rate shown is for an insured person who has reached attained age 75 and the cash value accumulation test has been elected. The minimum rate shown is for an insured person who has reached attained age 100 and the guideline premium test or the cash value accumulation test has been elected. These charges may not be particularly relevant to your current situation. For more information, contact your John Hancock USA representative.
(7)  This charge is not currently imposed, but we reserve the right to do so in the policy.
The next table describes the minimum and maximum portfolio level fees and expenses, as of December 31, 2018, charged by any of the portfolios underlying a variable investment account offered through this prospectus, expressed as a percentage of average net assets (rounded to two decimal places). These expenses are deducted from portfolio assets. For more information, please refer to the prospectus for the portfolio.
Total Annual Portfolio Operating Expenses Minimum Maximum
Range of expenses, including management fees, distribution and/or service (12b-1) fees, and other expenses1 0.42% 1.87%
    
1  Certain of the portfolios’ advisers or subadvisers have contractually agreed to reimburse or waive certain portfolio level expenses. The minimum and maximum expenses shown do not reflect these contractual expense reimbursements or waivers. If such reimbursements or waivers were reflected, the minimum and maximum expenses would be 0.25% and 1.75%, respectively.
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DETAILED INFORMATION
This section of the prospectus provides additional detailed information that is not contained in the Summary of Benefits and Risks section.
Table of Variable Investment Accounts and Investment Subadvisers
When you select a Separate Account variable investment account, we invest your money in shares of a corresponding portfolio of the John Hancock Variable Insurance Trust (the “Trust” or “JHVIT”) or the PIMCO Variable Insurance Trust (the “PIMCO Trust” with respect to the PIMCO VIT All Asset portfolio) and hold the shares in a subaccount of the Separate Account. Fees and expenses of the portfolios are not fixed or specified under the terms of the policies and may vary from year to year. These fees and expenses differ for each portfolio and reduce the investment return of each portfolio. Therefore, they also indirectly reduce the return you will earn on any Separate Account variable investment options you select. For more information, please refer to the prospectus for the portfolio.
The JHVIT and the PIMCO Trust are so-called “series” type mutual funds and each is registered under the Investment Company Act of 1940 (“1940 Act”) as an open-end management investment company. John Hancock Investment Management Services, LLC (“JHIMS”) provides investment advisory services to the Trust and receives investment management fees for doing so. JHIMS pays a portion of its investment management fees to other firms that manage the Trust’s portfolios. We are affiliated with JHIMS and may indirectly benefit from any investment management fees JHIMS retains. The PIMCO VIT All Asset portfolio of the PIMCO Trust receives investment advisory services from Pacific Investment Management Company LLC (“PIMCO”) and pays investment management fees to PIMCO.
Each of the American Asset Allocation, American Global Growth, American Growth, American Growth-Income, and American International portfolios invests in Series 1 shares of the corresponding investment portfolio of the Trust. The American Asset Allocation, American Global Growth, American Growth, American Growth-Income and, American International portfolios (“American Portfolios”) operate as “feeder funds,” which means that the portfolios do not buy investment securities directly. Instead, they invest in a “master fund” which in turn purchases investment securities. Each of the American feeder fund portfolios has the same investment objective and limitations as its master fund. The prospectus for the American Fund master fund is included with the prospectuses for the underlying funds. We pay American Funds Distributors, Inc., the principal underwriter for the American Funds Insurance Series, a percentage of some or all of the amounts allocated to the American Portfolios of the Trust for the marketing support services it provides.
The portfolios pay us or certain of our affiliates compensation for some of the distribution, administrative, shareholder support, marketing and other services we or our affiliates provide to the portfolios. Compensation payments may be made by a portfolio’s investment adviser or its affiliates. The compensation payments are based on a percentage of the assets of the portfolios attributable to the variable insurance products that we and our affiliates issue. These percentages may differ from portfolio to portfolio and among classes of shares within a portfolio. In some cases, the compensation is derived from the Rule 12b-1 fees that are deducted from a portfolio’s assets for the services we or our affiliates provide to that portfolio. These compensation payments do not, however, result in any charge to you in addition to what is shown in the prospectus for the portfolio.
The following table provides a general description of the portfolios that underlie the variable investment accounts we make available under the policy. You bear the investment risk of any portfolio you choose as a variable investment account for your policy. You can find a full description of each portfolio, including the investment objectives and strategies, policies, restrictions, and risks, in the prospectus for that portfolio. You should read the portfolio’s prospectus carefully before investing in the corresponding variable investment account.
The variable investment accounts in the Separate Account are not publicly traded mutual funds. The variable investment accounts are only available to you as variable investment accounts in the policies, or in some cases through other variable annuity contracts or variable life insurance policies issued by us or by other life insurance companies. In some cases, the variable investment accounts also may be available through participation in certain qualified pension or retirement plans. The portfolios' investment advisers and managers (i.e. subadvisers) may manage publicly traded mutual funds with similar names and investment objectives. However, the portfolios are not directly related to any publicly traded mutual fund. You should not compare the performance of any variable investment account described in this prospectus with the performance of a publicly traded mutual fund. The performance of any publicly traded mutual fund could differ substantially from that of any of the variable investment accounts of our Separate Account.
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The portfolios available under the policies, the investment subadvisers (engaged by JHIMS or PIMCO) and the investment objective for each portfolio are described in the table below. For additional information regarding these portfolios’ investment objectives and strategies, policies and restrictions of and the risks relating to investment in the portfolios, please refer to the prospectus for the portfolio.
Portfolio Subadviser Investment Objective
500 Index John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To approximate the aggregate total return of a broad-based U.S. domestic equity market index.
Active Bond John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to provide income and capital appreciation.
American Asset Allocation Capital Research and Management Company (Adviser to the American Funds Insurance Series) To seek to provide high total return (including income and capital gains) consistent with preservation of capital over the long-term.
American Global Growth Capital Research and Management Company (Adviser to the American Funds Insurance Series) To seek to provide long-term growth of capital.
American Growth Capital Research and Management Company (Adviser to the American Funds Insurance Series) To seek to provide growth of capital.
American Growth–Income Capital Research and Management Company (Adviser to the American Funds Insurance Series) To seek to provide growth of capital and income.
American International Capital Research and Management Company (Adviser to the American Funds Insurance Series) To seek to provide long-term growth of capital.
Blue Chip Growth T. Rowe Price Associates, Inc. To seek to provide long-term growth of capital. Current income is a secondary objective.
Capital Appreciation Jennison Associates LLC To seek to provide long-term growth of capital.
Capital Appreciation Value T. Rowe Price Associates, Inc. To seek to provide long-term capital appreciation.
Core Bond Wells Capital Management, Incorporated To seek to provide total return consisting of income and capital appreciation.
Emerging Markets Value Dimensional Fund Advisors LP To seek to provide long-term capital appreciation.
Equity Income T. Rowe Price Associates, Inc. To seek to provide substantial dividend income and also long-term growth of capital.
Financial Industries John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to provide growth of capital.
Fundamental All Cap Core John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to provide long-term growth of capital.
Fundamental Large Cap Value John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to provide long-term capital appreciation.
Global Templeton Global Advisors Limited To seek to provide long-term capital appreciation.
Global Bond Pacific Investment Management Company LLC To seek to provide maximum total return, consistent with preservation of capital and prudent investment management.
Health Sciences T. Rowe Price Associates, Inc. To seek to provide long-term capital appreciation.
High Yield Western Asset Management Company To seek to provide an above-average total return over a market cycle of 3 to 5 years, consistent with reasonable risk.
International Equity Index SSGA Funds Management, Inc. To seek to track the performance of a broad-based equity index of foreign companies primarily in developed countries and, to a lesser extent, in emerging markets.
International Small Company Dimensional Fund Advisors LP To seek to provide long-term capital appreciation.
International Value Templeton Investment Counsel, LLC To seek to provide long-term growth of capital.
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Portfolio Subadviser Investment Objective
Investment Quality Bond Wellington Management Company LLP To seek to provide a high level of current income consistent with the maintenance of principal and liquidity.
Lifestyle Balanced John Hancock Asset Management, a division of Manulife Asset Management (US) LLC; and John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to provide a high level of current income and growth of capital, with a greater emphasis on growth of capital.
Lifestyle Conservative John Hancock Asset Management, a division of Manulife Asset Management (US) LLC; and John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to provide a high level of current income with some consideration given to growth of capital.
Lifestyle Growth John Hancock Asset Management, a division of Manulife Asset Management (US) LLC; and John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to provide long-term growth of capital. Current income is also a consideration.
Lifestyle Moderate John Hancock Asset Management, a division of Manulife Asset Management (US) LLC; and John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to provide a balance between a high level of current income and growth of capital, with a greater emphasis on income.
Managed Volatility Aggressive John Hancock Asset Management, a division of Manulife Asset Management (US) LLC; and John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to provide long-term growth of capital while seeking to both manage the volatility of return and limit the magnitude of portfolio losses.
Managed Volatility Balanced John Hancock Asset Management, a division of Manulife Asset Management (US) LLC; and John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to provide growth of capital and current income while seeking to both manage the volatility of return and limit the magnitude of portfolio losses.
Managed Volatility Conservative John Hancock Asset Management, a division of Manulife Asset Management (US) LLC; and John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to provide current income and growth of capital while seeking to both manage the volatility of return and limit the magnitude of portfolio losses.
Managed Volatility Growth John Hancock Asset Management, a division of Manulife Asset Management (US) LLC; and John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to provide long-term growth of capital while seeking to both manage the volatility of return and limit the magnitude of portfolio losses.
Managed Volatility Moderate John Hancock Asset Management, a division of Manulife Asset Management (US) LLC; and John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to provide current income and growth of capital while seeking to both manage the volatility of return and limit the magnitude of portfolio losses.
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Portfolio Subadviser Investment Objective
Mid Cap Index John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to approximate the aggregate total return of a medium-capitalization U.S. domestic equity market index.
Mid Cap Stock Wellington Management Company, LLP To seek to provide long-term growth of capital.
Mid Value T. Rowe Price Associates, Inc. To seek to provide long-term capital appreciation.
Money Market John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to obtain maximum current income consistent with preservation of principal and liquidity. Certain market conditions may cause the return of the portfolio to become low or possibly negative.
PIMCO VIT All Asset (a series of PIMCO Variable Insurance Trust) (only Class M is available) Pacific Investment Management Company LLC To seek to provide maximum real return, consistent with preservation of real capital and prudent investment management.
Real Estate Securities Deutsche Investment Management Americas Inc. To seek to provide a combination of long-term capital appreciation and current income.
Science & Technology Allianz Global Investors U.S. LLC; and T. Rowe Price Associates, Inc. To seek to provide long-term growth of capital. Current income is incidental to the portfolio’s objective.
Select Bond John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to provide income and capital appreciation.
Short Term Government Income John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to provide a high level of current income consistent with preservation of capital. Maintaining a stable share price is a secondary goal.
Small Cap Index John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to approximate the aggregate total return of a small-capitalization U.S. domestic equity market index.
Small Cap Opportunities Dimensional Fund Advisors LP; and GW&K Investment Management, LLC To seek to provide long-term capital appreciation.
Small Cap Stock Wellington Management Company LLP To seek to provide long-term capital appreciation.
Small Cap Value Wellington Management Company LLP To seek to provide long-term capital appreciation.
Small Company Value T. Rowe Price Associates, Inc. To seek to provide long-term growth of capital.
Strategic Income Opportunities John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to provide a high level of current income.
Total Bond Market John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to track the performance of the Bloomberg Barclays U.S. Aggregate Bond Index.*
Total Stock Market Index John Hancock Asset Management, a division of Manulife Asset Management (North America) Limited To seek to approximate the aggregate total return of a broad U.S. domestic equity market index.
Ultra Short Term Bond John Hancock Asset Management, a division of Manulife Asset Management (US) LLC To seek to provide a high level of current income consistent with the maintenance of liquidity and the preservation of capital.
    
*  The Barclays U.S. Aggregate Bond Index represents the U.S. investment grade bond market.
If the shares of a portfolio are no longer available for investment or in our judgment investment in a portfolio becomes inappropriate, we may eliminate the shares of a portfolio and substitute shares of another portfolio of the Trust or another open-end registered investment company. Substitution may be made with respect to both existing investments and the investment of future purchase payments. However, we will make no such substitution without first notifying you and obtaining approval of the appropriate insurance regulatory authorities and the SEC (to the extent required by the 1940 Act).
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Valuation
We will purchase and redeem series fund shares for the Separate Account at their net asset value without any sales or redemption charges. Shares of a series fund represent an interest in one of the funds of the series fund which corresponds to a subaccount of the Separate Account. Any dividend or capital gains distributions received by the Separate Account will be reinvested in shares of that same fund at their net asset value as of the dates paid.
On each business day, shares of each series fund are purchased or redeemed by us for each subaccount based on, among other things, the amount of net premiums allocated to the subaccount, distributions reinvested, and transfers to, from and among subaccounts, all to be effected as of that date. Such purchases and redemptions are effected at each series fund's net asset value per share determined for that same date. A “business day” is any date on which the New York Stock Exchange is open for trading. We compute policy values for each business day as of the close of that day (usually 4:00 p.m. Eastern time).
Voting interest
We will vote shares of the portfolios held in the Separate Account at the shareholder meetings according to voting instructions timely received from persons having the voting interest under the policies. We will determine the number of portfolio shares for which voting instructions may be given not more than 90 days prior to the meeting. Proxy material will be distributed to each person having the voting interest under the policy together with appropriate forms for giving voting instructions. We will vote all portfolio shares that we hold in the Separate Account for policy owners in proportion to the instructions timely received by us from policy owners from all our Separate Accounts that are registered with the SEC under the 1940 Act. We will vote all portfolio shares that we otherwise are entitled to vote (including our own shares) on any matter in proportion to the instructions timely received by us and any affiliated insurance companies with respect to the matter from policy owners in Separate Accounts of these insurance companies that are registered with the SEC under the 1940 Act. The effect of this proportional voting is that a small number of policy owners can determine the outcome of a vote.
We determine the number of a series fund's shares held in a subaccount attributable to each owner by dividing the amount of a policy's variable investment account value held in the subaccount by the net asset value of one share in the series fund. Fractional votes will be counted. We determine the number of shares as to which the owner may give instructions as of the record date for a series fund's meeting. Owners of policies may give instructions regarding the election of the Board of Trustees or Board of Directors of a series fund, ratification of the selection of independent auditors, approval of series fund investment advisory agreements and other matters requiring a shareholder vote. We will furnish owners with information and forms to enable owners to give voting instructions. However, we may, in certain limited circumstances permitted by the SEC's rules, disregard voting instructions. If we do disregard voting instructions, you will receive a summary of that action and the reasons for it in the next semi-annual report to owners.
The voting privileges described above reflect our understanding of applicable Federal securities law requirements. To the extent that applicable law, regulations or interpretations change to eliminate or restrict the need for such voting privileges, we reserve the right to proceed in accordance with any such revised requirements. We also reserve the right, subject to compliance with applicable law, including approval of owners if so required, (1) to transfer assets determined by John Hancock USA to be associated with the class of policies to which your policy belongs from the Separate Account to another separate account or subaccount, (2) to deregister the Separate Account under the 1940 Act, (3) to substitute for the fund shares held by a subaccount any other investment permitted by law, and (4) to take any action necessary to comply with or obtain any exemptions from the 1940 Act. Any such change will be made only if, in our judgment, the change would best serve the interests of owners of policies in your policy class or would be appropriate in carrying out the purposes of such policies. We would notify owners of any of the foregoing changes and to the extent legally required, obtain approval of affected owners and any regulatory body prior thereto. Such notice and approval, however, may not be legally required in all cases.
Description of John Hancock (USA)
We are a stock life insurance company incorporated in Maine on August 20, 1955 by a special act of the Maine legislature and redomesticated under the laws of Michigan. We are a licensed life insurance company in the District of Columbia and all states of the United States except New York. Our ultimate parent is Manulife Financial Corporation (“MFC”), a publicly traded company based in Toronto, Canada. MFC is the holding company of John Hancock USA and its subsidiaries. However, neither John Hancock USA nor any of its affiliated companies guarantees the investment performance of the Separate Account. Our executive office is located at 200 Berkeley St., Boston, MA 02116.
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We are ranked and rated by independent financial rating services, which may include Moody's, Standard & Poor's, Fitch and A.M. Best. The purpose of these ratings is to reflect the financial strength or claims-paying ability of the company, but they do not specifically relate to its products, the performance (return) of these products, the value of any investment in these products upon withdrawal or to individual securities held in any portfolio. These ratings do not apply to the safety and performance of the Separate Account.
Description of Separate Account A
The variable investment accounts shown on page 1 are in fact subaccounts of the John Hancock Life Insurance Company (U.S.A.) Separate Account A, a separate account operated by us under Michigan law. The Separate Account meets the definition of “separate account” under the Federal securities laws and is registered as a unit investment trust under the 1940 Act. Such registration does not involve supervision by the SEC of the management of the Separate Account or of us.
The Separate Account’s assets are our property. Each policy provides that amounts we hold in the Separate Account pursuant to the policies cannot be reached by any other persons who may have claims against us and can’t be used to pay any indebtedness of John Hancock USA other than those arising out of policies that use the Separate Account. Income, gains and losses credited to, or charged against, the Separate Account reflect the Separate Account's own investment experience and not the investment experience of John Hancock USA's other assets. John Hancock USA is obligated to pay all amounts promised to policy owners under the policies.
New variable investment accounts may be added and made available to policy owners from time to time. Existing variable investment accounts may be modified or deleted at any time.
The general account
The fixed account and the indexed accounts are part of our general account. Our general account consists of all assets owned by us other than those in the Separate Account and any other separate accounts which we have established and may establish. Any interest credited to a policy owner from an investment in a fixed account or any indexed account will be paid from the Company’s general account and will be subject to the Company’s financial strength and claims paying ability.
Subject to applicable law, John Hancock USA has sole discretion over the investment of the assets of the general account and policy owners do not share in the investment experience of, or have any preferential claim on, those assets. John Hancock USA bears full investment risk for all amounts allocated to the fixed account. For the indexed accounts, John Hancock USA bears the investment risk of guaranteeing the minimum participation rate, the minimum cap rate, and segment floor rate (see “The indexed accounts”).
Because of exemptive and exclusionary provisions, interests in our fixed account and indexed accounts have not been and will not be registered under the Securities Act of 1933 (“1933 Act”) and our general account has not been registered as an investment company under the 1940 Act. Accordingly, neither the general account nor any interests therein are subject to the provisions of these acts. Disclosure regarding fixed accounts and indexed accounts, however, is subject to certain generally-applicable provisions of the Federal securities laws relating to accuracy and completeness of statements made in prospectuses.
The fixed account
We guarantee that the policy value allocated to any fixed account will accrue interest daily at an effective annual rate that we determine without regard to the actual investment experience of the general account. We currently offer only one fixed account—the standard fixed account. The effective annual rate we declare for the fixed account will never be less than 2%. We reserve the right to offer one or more additional fixed accounts with characteristics that differ from those of the current fixed account, but we are under no obligation to do so. Any interest we credit in excess of the guaranteed interest crediting rate will be based on our sole discretion. Additionally, interest credited on a non-guaranteed basis varies over time, is rarely the same year-over-year, and may be equal to the guaranteed minimum for extended periods of time.
The indexed accounts
We have not registered the indexed accounts with the Securities and Exchange Commission (“SEC”). Disclosures regarding the indexed accounts, however, are subject generally to applicable provisions of federal securities laws relating to the accuracy and completeness of statements made in the prospectus.
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John Hancock USA believes that with respect to the indexed accounts, the Policy is in substantial compliance with the conditions set forth in Section 989J(a)(1)-(3) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Since the indexed accounts are part of John Hancock USA’s general account and, as a result, their values do not vary according to the performance of a separate account, the indexed accounts qualify for an exemption from registration under the federal securities law. In addition, the products in which the indexed accounts are offered satisfy standard non-forfeiture laws. Accordingly, John Hancock USA has a reasonable basis for concluding that the indexed accounts provide sufficient guarantees of principal and interest through John Hancock USA’s general account to qualify under Section 3(a)(8).
You can elect to allocate net premium or transfer policy value to the following two indexed accounts: Base Capped Indexed Account and Base High Par Capped Indexed Account. Amounts that you allocate to the indexed accounts are initially held in a portion of an indexed account you elected (the “holding segment”) until the amounts are designated to the segment of the indexed account on the segment initiation date, which is generally the 15th of each month. Amounts allocated to a holding segment receive interest in the same manner and at the same rate as amounts in the fixed account (see “The fixed account”). A segment is 12-months in duration (the “segment term”) and is eligible to receive interest (“indexed segment interest credit”) on the last day of the segment term, which is known as the “segment maturity date.”
You may start a new segment at any time your policy is in force by making a new allocation to an indexed account prior to the “lock in date.” The lock in date is the 3rd business day prior to the segment initiation date. Any amounts received after the lock in date will be included in a holding segment for a new segment on the next following segment initiation date. You can have up to 12 segments of the same indexed account at any given time while your policy is in force. You may cancel your allocation to an indexed account by submitting a written request to us no later than the end of the business day on the lock in date. A cancellation will result in a reallocation of amounts from the holding segment to the fixed account.
Index segment interest credit
For either indexed account you elect, we calculate and apply an index segment interest credit to the segment proceeds on the segment maturity date using a formula described below:
•  Each indexed account tracks and measures the performance of the S&P 500 based on two single points in time, the segment initiation date and the segment maturity date (the “index change”). The value of the S&P 500 at any point between these dates does not impact the calculation of the index segment interest credit. This means if the value of the S&P 500 on the segment initiation date and the segment maturity date is the same (i.e., 2500) but the value of the S&P 500 is higher on all the other days of the segment (i.e., 3000), the index change used to calculate the index segment interest credit for that segment will only be based on the segment initiation date and the segment maturity date. The index change will not take into account the days where the value of the S&P 500 was 3000, which means that it is possible that the index change used to calculate index segment interest credit may be limited to the segment floor rate of 0.25%. (While the indexed accounts refer to the S&P 500, neither the policy nor the indexed accounts directly participate in any stock or equity investments.) At the end of the segment term, we apply an index segment interest credit based on the index change and the application of the indexed account parameters identified below. The rate we use to calculate the index segment interest credit will never be less than the guaranteed segment floor rate of 0.25%, which is described below.
•  The indexed account parameters of each indexed account will include a guaranteed segment floor rate, a segment cap rate, and a participation rate. The current participation rate and current segment cap rate for new segments will be declared at the time a segment is created and guaranteed for the segment term, but they will never be less than the guaranteed minimum participation rate and guaranteed minimum segment cap rate that are in the Policy Specifications for each indexed account. To understand current segment cap rates and current participation rates available to you at the time of issue, you should request an illustration of the indexed accounts at the time of sale or contact a John Hancock USA representative. We will notify you in writing if we change current segment cap rates or current participation rates applicable to subsequent segments.
The guaranteed segment floor rate is the minimum rate used in calculating the index segment interest credit that will be declared for a segment term. The guaranteed segment floor rate is 0.25% for each indexed account.
The participation rate is a percentage of a positive index change, that we use to calculate the index segment interest credit for a segment. The guaranteed minimum participation rate for the Base Capped Indexed Account and the Base High Par Capped Indexed Account are 100% and 140%, respectively.
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The segment cap rate limits the rate that is used in calculating the index segment interest credit. If the positive index change multiplied by the participation rate results in a rate that is higher than the segment cap rate, we will use the segment cap rate to determine the index segment interest credit. If the positive index change multiplied by the participation rate is less than the segment cap rate but greater than the segment floor rate, we would use the index change multiplied by the participation rate to determine the index segment interest credit. The segment minimum cap rate for the Base Capped Indexed Account and the Base High Par Capped Indexed Account is 3.00% and 2.50%, respectively.
Below are hypothetical examples that demonstrate how the indexed account parameters for the Base Capped Indexed Account can limit or enhance the index change.
1. Hypothetical example where index change is less than the guaranteed segment floor rate.
Assume amounts have been allocated to a segment of the Base Capped Indexed Account, the participation rate is 100%, the segment cap rate is 7% and the guaranteed segment floor rate is 0.25%:
(a)  First, we determine the index change. We subtract the value of the S&P 500 on the segment maturity date from the value of the S&P 500 on the segment initiation date and then divide that value by the value of the S&P 500 on the segment initiation date ([2,660 -2,800]/2800= -5%). The index change in this hypothetical example is -5%.
(b)  Next, we multiply the index change determined in (a) by the participation rate (-5% x 100% = -5%). The resulting rate is -5%.
(c)  Then, we determine if the resulting rate in (b) (i.e., -5%) needs to be adjusted by the segment cap rate or the guaranteed segment floor rate. The rate used to calculate the index segment interest credit cannot exceed the segment cap rate but it also cannot be less than the guaranteed segment floor rate. In this case, since the resulting rate in (b) (-5%) is less than the guaranteed segment floor rate (i.e., 0.25%), we will use the segment floor rate to calculate the index segment interest credit.
This example demonstrates that the rate used to calculate the index segment interest credit will not be less than the guaranteed segment floor rate of 0.25%. Using a rate that is equal to the guaranteed segment floor rate to calculate interest over a period of time may not be sufficient to pay the policy’s monthly deductions and you may need to pay additional premium to keep your policy in force.
2. Hypothetical example where the index change is less the segment cap rate but greater than guaranteed segment floor rate.
Assume amounts have been allocated to a segment of the Base Capped Indexed Account, the participation rate is 100%, the segment cap rate is 7% and the guaranteed segment floor Rate is 0.25%, we take the following steps:
(a)  First, we determine the index change. We subtract the value of the S&P 500 on the segment maturity date from the value of the S&P 500 on the segment initiation date and then divide that value by the value of the S&P 500 on the segment initiation date ([2,884 – 2,800]/2,800 = 3%). The index change in this hypothetical example is 3%.
(b)  Next, we multiply the index change determined in (a) by the participation rate (3% x 100% = 3%). The resulting rate is 3%.
(c)  Then, we determine if the resulting rate in (b) (i.e., 3%) needs to be adjusted by the segment cap rate or the guaranteed segment floor rate. The rate used to calculate the index segment interest credit cannot exceed the segment cap rate but it also cannot be less than the guaranteed segment floor rate. In this case, since the resulting rate in (b) (i.e., 3%) is greater than the guaranteed segment floor rate (i.e., 0.25%) and less than the segment cap rate (i.e., 7%), we will use the entire 3% to calculate the index segment interest credit.
This example demonstrates that when the index return is between the segment floor rate and segment cap rate, the entire index return will be used in calculating the index segment interest credit.
3. Hypothetical example where the index change exceeds the segment cap rate.
Assume amounts have been allocated to a segment of the Base Capped Indexed Account, the participation rate is 100%, the segment cap rate is 7% and the guaranteed segment floor Rate is 0.25%, we take the following steps:
(a)  First, we determine the index change. We subtract the value of the S&P 500 on the segment maturity date from the value of the S&P 500 on the segment initiation date and then divide that value by the value of the S&P 500 on the segment initiation date ([3,024-2,800] / 2,800 = 8%). The index change in this hypothetical example is 8%.
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(b)  Next, we multiply the index change determined in (a) by the participation rate (8% x 100% = 8%). The resulting rate is 8%.
(c)  Then we determine if the resulting rate in (b) (i.e., 8%) needs to be adjusted by the segment cap rate or the guaranteed segment floor rate. The rate used to calculate the index segment interest credit cannot exceed the segment cap rate but it also cannot be less than the guaranteed segment floor rate. In this case, since the resulting rate calculated in (b) (i.e., 8%) is greater than the segment cap rate (i.e., 7%), we will use the segment cap rate to calculate the index segment interest credit.
This example demonstrates how the 7% segment cap rate can have the effect of limiting the extent to which the index change (i.e.,8%) can be used in calculating the index segment interest credit (i.e., we applied the segment cap rate instead of the index change in this example).
Below are hypothetical examples that demonstrate how the indexed account parameters for the Base High Par Capped Indexed Account can limit or enhance the index change.
1. Hypothetical example where index change is less than the guaranteed segment floor rate.
Assume amounts have been allocated to a segment of the Base High Par Capped Indexed Account, the participation rate is 160%, the segment cap rate is 5.5% and the guaranteed segment floor rate is 0.25%:
(a)  First, we determine the index change. We subtract the value of the S&P 500 on the segment maturity date from the value of the S&P 500 on the segment initiation date and then divide that value by the value of the S&P 500 on the segment initiation date ([2,660 -2,800]/2800= -5%). The index change in this hypothetical example is -5%.
(b)  Next, we multiply the index change determined in (a) by the participation rate (-5% x 160% = -8%). The resulting rate is -8%.
(c)  Then, we determine if the resulting rate in (b) (i.e., -8%) needs to be adjusted by the segment cap rate or the guaranteed segment floor rate. The rate used to calculate the index segment interest credit cannot exceed the segment cap rate but it also cannot be less than the guaranteed segment floor rate. In this case, since the resulting rate in (b) (i.e., -8%) is less than the guaranteed segment floor rate (i.e., 0.25%), we will use the segment floor rate to calculate the index segment interest credit.
This example demonstrates that the rate used to calculate the index segment interest credit will not be less than the guaranteed segment floor rate of 0.25%. Using a rate that is equal to the guaranteed segment floor rate to calculate interest over a period of time may not be sufficient to pay the policy’s monthly deductions and you may need to pay additional premium to keep your policy in force.
2. Hypothetical example where the index change is less the segment cap rate but greater than guaranteed segment floor rate.
Assume amounts have been allocated to a segment of the Base High Par Capped Indexed Account, the participation rate is 160%, the segment cap rate is 5.5% and the guaranteed segment floor Rate is 0.25%, we take the following steps:
(a)  First, we determine the index change. We subtract the value of the S&P 500 on the segment maturity date from the value of the S&P 500 on the segment initiation date and then divide that value by the value of the S&P 500 on the segment initiation date ([2,884 – 2,800]/2,800 = 3%). The index change in this hypothetical example is 3%.
(b)  Next, we multiply the index change determined in (a) by the participation rate (3% x 160% = 4.8%). The resulting rate is 4.8%.
(c)  Then, we determine if the resulting rate in (b) (i.e., 4.8%) needs to be adjusted by the segment cap rate or the guaranteed segment floor rate. The rate used to calculate the index segment interest credit cannot exceed the segment cap rate but it also cannot be less than the guaranteed segment floor rate. In this case, since the resulting rate in (b) (i.e., 4.8%) is greater than the guaranteed segment floor rate (i.e., 0.25%) and less than the segment cap rate (i.e., 5.5%), we will be able to use the entire 4.8% to calculate the index segment interest credit.
This example demonstrates that when the index return is between the segment floor rate and segment cap rate, the entire index return will be used in calculating the index segment interest credit. The higher participation rate of 160% allows the resulting rate used in calculating the index segment interest credit to be greater than the index change. However, if the hypothetical index return was 3.5% or greater, the resulting rate in (b) used to calculate index segment interest credit would be limited by the segment cap rate (i.e., 5.5%), as is described in the next example.
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3. Hypothetical example where the index change exceeds the segment cap rate.
Assume amounts have been allocated to a segment of the Base High Par Capped Indexed Account, the participation rate is 160%, the segment cap rate is 5.5% and the guaranteed segment floor Rate is 0.25%, we take the following steps:
(a)  First, we determine the index change. We subtract the value of the S&P 500 on the segment maturity date from the value of the S&P 500 on the segment initiation date and then divide that value by the value of the S&P 500 on the segment initiation date ([3,024-2,800] / 2,800 = 8%). The index change in this hypothetical example is 8%.
(b)  Next, we multiply the index change determined in (a) by the participation rate (8% x 160% = 12%). The resulting rate is 12%.
(c)  Then we determine if the resulting rate in (b) (i.e., 12%) needs to be adjusted by the segment cap rate or the guaranteed segment floor rate. The rate used to calculate the index segment interest credit cannot exceed the segment cap rate but it also cannot be less than the guaranteed segment floor rate. In this case, since the resulting rate calculated in (b) (i.e., 12%) is greater than the segment cap rate (i.e., 5.5%), we will use the segment cap rate to calculate the index segment interest credit.
This example demonstrates how the 160% participation rate can increase the effect of a positive index change compared to an indexed account with a 100% participation rate, but the 5.5% segment cap rate will limit the extent to which the resulting rate (i.e.,12%) can be used in calculating that credit (i.e., we applied the segment cap rate instead of the resulting rate in this example).
Through the application of different indexed account parameters, each indexed account presents a different risk and return profile and a different range of potential outcomes. Your choice of allocation should take into account your financial objectives, time horizon and personal risk tolerance. You should discuss the indexed account parameters with your registered representative to ensure you understand how they may affect the index segment interest credit under each indexed account.
The following chart shows how the indexed accounts offered in this prospectus would perform in different hypothetical scenarios using a hypothetical index return and the assumed current indexed account parameters shown below:
If Hypothetical
Index Return is: 		Index Return After the
Application of the
Base Capped Indexed
Account Parameters 		Index Return After the
Application of the Base
High Par Capped Indexed
Account Parameters 		Account
Performance
  100% Participation Rate
7% Segment Cap Rate
0.25% Segment Floor Rate 		160% Participation Rate
5.5% Segment Cap Rate
0.25% Segment Floor Rate 		 
-5% 0.25% 0.25% Same return
0% 0.25% 0.25% Same return
3% 3% 4.8% Base High Par Capped performs better
8% 7% 5.5% Base Capped performs better
When the index change is less than segment cap rates but greater than the segment floor rate for the indexed accounts, the Base High Par Capped Indexed Account may earn more index segment interest credit when compared to the Base Capped Indexed Account, which has a lower participation rate. When the index change is higher than the segment cap rates for both indexed accounts, the Base High Par Capped Indexed Account may earn less interest segment interest credit when compared to the Base Capped Indexed Account, which has a higher segment cap rate.
Withdrawals or transfers
Withdrawals from an indexed account prior to the segment maturity date will reduce the amount of any index segment interest credit for that segment by proportionately reducing the balance used in calculating the index segment interest credit on the segment maturity date by the amount of the withdrawal multiplied by the remaining months in the segment. The following hypothetical example compares how index segment interest credit is calculated on the segment maturity date when a withdrawal is taken during a segment and when a withdrawal is not taken during a segment.
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  Initial
segment
balance 		Withdrawal
taken in
policy
month 3 		Segment balance
on segment
maturity date 		Hypothetical
Rate used
to calculate
index segment
interest credit 		Index segment
interest credit
on segment
maturity date
No withdrawal $100,000 n/a $100,000 3.0% $100,000 x 3.0%
= $3,000
$10,000 withdrawal $100,000 $10,000 $100,000 - $10,000 x
(9/12) = $92,500 		3.0% $92,500 x 3.0%
= $2,775
Transfers from an indexed account to another indexed account, a variable investment account or a fixed account can only be made on the segment maturity date (see “Limitations on transfers to and from an indexed account”).
If a policy terminates due to death of the insured, surrender of the net cash surrender value or insufficient premium before a segment maturity date, no index segment interest credit will be applied to that segment. Amounts allocated to an indexed account are subject to a lock out period following a withdrawal from a segment (see “Withdrawals”). When you take a withdrawal (that is not a systematic withdrawal) from a segment of an indexed account prior to the segment maturity date, a “lock-out period” will be imposed upon the creation of new segments. The duration of the lock-out period is twelve consecutive months. During the lock-out period, any portion of policy value in a holding segment, as well as any additional amounts allocated or transferred to an indexed account, will not be designated to a new segment until the first segment initiation date following the lock-out period.
Segment proceeds
The segment proceeds equal the sum of the segment balance on a segment maturity date plus the indexed segment interest credit we apply to that segment. On the segment maturity date, segment proceeds are allocated according to the investment allocation instructions we have on file for you. Segment proceeds can be allocated to the fixed account, the variable investment accounts or the indexed accounts (see “Allocation of future premium payments and indexed account segment proceeds”). If no allocation instructions are given, segment proceeds are allocated to a new segment in the same indexed account.
Availability of the indexed accounts
We may add additional indexed accounts, cease to offer any indexed account or close the indexed accounts to new allocations and transfers. We also reserve the right to substitute the S&P 500 for another external index; any substitution will apply to new segments only. If we substitute the S&P 500 for another external index, the indexed accounts will continue to offer the guaranteed indexed account parameters shown in the Policy Specifications. Any open segments in the indexed accounts will remain until they mature after which the segment proceeds will automatically be transferred to the fixed account, unless you request in writing that the segment proceeds be transferred to an available indexed account. In the event that we decide to substitute the S&P 500 or we cease to offer an indexed account, we will notify you and any assignee of record in advance of the change at your last known addresses.
The death benefit
In your application for the policy, you will tell us how much life insurance coverage you want on the life of the insured person. This is called the “Total Face Amount.” Total Face Amount is composed of the Base Face Amount and any Supplemental Face Amount you elect. The Supplemental Face Amount you can have generally cannot exceed 400% of the Base Face Amount at the Issue Date. Thereafter, scheduled and unscheduled increases to the Supplemental Face Amount cannot exceed 400% of the Total Face Amount at the Issue Date. There are a number of factors you should consider in determining whether to elect coverage in the form of Base Face Amount or in the form of Supplemental Face Amount. These factors are discussed under “Base Face Amount vs. Supplemental Face Amount” below.
When the insured person dies, we will pay the death benefit minus any outstanding policy debt and unpaid fees and charges. There are two ways of calculating the death benefit. You must choose which one you want in the application. The two death benefit options are described below.
•  Option 1 - The death benefit will equal the greater of (1) the Total Face Amount plus any amount payable under a supplementary benefit rider, or (2) the minimum death benefit (as described below).
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•  Option 2 - The death benefit will equal the greater of (1) the Total Face Amount plus any amount payable under a supplementary benefit rider, plus the policy value on the date of death, or (2) the minimum death benefit.
For the same premium payments, the death benefit under Option 2 will tend to be higher than the death benefit under Option 1. On the other hand, the cost of insurance charges (based on the higher net amount at risk) will be higher under Option 2 to compensate us for the additional insurance risk. Because of that, the policy value will tend to be higher under Option 1 than under Option 2 for the same premium payments.
Limitations on payment of death benefit
If the insured person commits suicide within certain time periods (generally within two years from the Issue Date of the policy), the amount payable will be equal to the premiums paid, less the amount of any policy debt on the date of death, and less any withdrawals.
Also if an application misstated the age or sex of the insured person, we will adjust, if necessary, the Base Face Amount, any Supplemental Face Amount, and every other benefit to that which would have been purchased at the correct age or sex by the most recent cost of insurance charge.
Base Face Amount vs. Supplemental Face Amount
As noted above, you should consider a number of factors in determining whether to elect coverage in the form of Base Face Amount or in the form of Supplemental Face Amount.
For the same amount of premiums paid, the amount of the Face Amount charge deducted from policy value and the amount of compensation paid to the selling insurance agent will generally be less if coverage is included as Supplemental Face Amount, rather than as Base Face Amount. On the other hand, the amount of any Supplemental Face Amount may be subject to a shorter No-Lapse Guarantee Period (see “No-lapse guarantee”).
If your priority is to reduce your Face Amount charges, you may wish to maximize the proportion of the Supplemental Face Amount. However, if your priority is to take advantage of the No-Lapse Guarantee feature after the fifth policy year or to maximize the death benefit when the insured person reaches age 121, then you may wish to maximize the proportion of the Base Face Amount. However, the No-Lapse Guarantee for the Base Face Amount under any policy that has elected an increasing Supplemental Face Amount or the Return of Premium Death Benefit Rider is limited to the first five policy years.
The minimum death benefit
In order for a policy to qualify as life insurance under Federal tax law, there has to be a minimum amount of insurance in relation to policy value. There are two tests that can be applied under Federal tax law—the “guideline premium test” and the “cash value accumulation test.” You must elect which test you wish to have applied at issue. Once elected, the test cannot be changed without our approval.
Under the guideline premium test, we compute the minimum death benefit each business day by multiplying the policy value on that date by the death benefit factor applicable on that date. Factors for some ages are shown in the table below:
Attained Age   Applicable Factor
40 and under
   250%
45
   215%
50
   185%
55
   150%
60
   130%
65
   120%
70
   115%
75
   105%
90
   105%
95 and above
   100%
A table showing the factor for each age will appear in the policy.
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Under the cash value accumulation test, we compute the minimum death benefit each business day by multiplying the policy value on that date by the death benefit factor applicable on that date. The factor decreases as attained age increases. A table showing the factor for each age will appear in the policy. Factors for some ages are shown in the table below.
Attained Age   Factor -
Female 		  Factor -
Male
40
   494.24%   445.47%
45
   415.18%   379.41%
50
   349.01%   322.43%
55
   294.49%   273.75%
60
   249.83%   233.40%
65
   213.66%   200.75%
70
   184.74%   174.53%
75
   161.66%   153.61%
90
   119.05%   116.28%
95
   111.37%   110.42%
100 and above
   100.00%   100.00%
The cash value accumulation test may be preferable if you want to fund the policy so that the minimum death benefit will increase earlier than would be required under the guideline premium test, or if you want to fund the policy at the “7 pay” limit for the full seven years (see “Tax considerations”).
To the extent that the calculation of the minimum death benefit under the selected life insurance qualification test causes the death benefit to exceed our limits, we reserve the right to return premiums or distribute a portion of the policy value so that the resulting amount of insurance is maintained within our limits. Alternatively, if we should decide to accept the additional amount of insurance, we may require additional evidence of insurability.
Requesting an increase in coverage
After the first policy year, you may make a written request for an unscheduled increase in Supplemental Face Amount. We must receive your written request within two months of your next policy anniversary. Generally, each such increase must be at least $50,000 and increases in any one policy year cannot exceed 25% of the Total Face Amount at issue. You will have to provide us with evidence that the insured person qualifies for the same risk classification that applied to them at issue. Generally, any increase will be effective on the next policy anniversary following the date we approve the request. Any unscheduled increase in Supplemental Face Amount after issue would first require that you terminate the Disability Payment of Specified Premium, Long-Term Care and Return of Premium Death Benefit Riders you may have elected at issue. The No-Lapse Guarantee Period for the Base Face Amount under any policy that has an unscheduled Supplemental Face Amount increase is limited to the first five policy years.
Requesting a decrease in coverage
After the first policy year, we may approve a reduction in the Base Face Amount or the Supplemental Face Amount, but only if:
•  the remaining Base Face Amount will be at least $50,000, and
•  the remaining Total Face Amount will at least equal the minimum required by the tax laws to maintain the policy’s life insurance status.
An approved decrease will take effect on the monthly deduction date on or next following the date we approve the request. We reserve the right to require that the Supplemental Face Amount be fully depleted before the Base Face Amount can be reduced.
Change of death benefit option
Under our current administrative rules, we permit the death benefit option to be changed from Option 2 to Option 1 after the first policy year. If you request in writing, and we approve a change from Option 2 to Option 1, your Total Face Amount after the change will equal your Total Face Amount before the change plus the policy value as of the effective date of the change. If you change from Option 2 to Option 1, your death benefit will change from one that may increase over time due to the investment experience of the underlying variable investment accounts or the performance of the indexed accounts to one
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that is a level death benefit. Changing from Option 2 to Option 1 can also lower the monthly Cost of Insurance charge since this charge is lowered when the Net Amount At Risk is reduced; all other charges under the policy would remain the same. We reserve the right to limit a request for a change if the change would cause the policy to fail to qualify as life insurance for tax purposes.
A change in the death benefit option will result in a change in the policy's Total Face Amount, in order to avoid any change in the amount of the death benefit. The new Total Face Amount will be equal to the Total Face Amount prior to the change plus the policy value as of the date of the change. The change will take effect on the monthly deduction date on or next following the date the written request for the change is received at our Service Office.
Notwithstanding other policy limits, if the change from Option 2 to 1 yields a Total Face Amount that is larger than 400% of the Total Face Amount at issue, we will allow for the increase. The change will take effect on the monthly deduction date on or next following the date the written request for the change is received at our Service Office.
Tax consequences of coverage changes
If you change the death benefit option, the Federal tax law test (“guideline premium test” or “cash value accumulation test”) that you elected at issue will continue to apply. Please read “The minimum death benefit” for more information about these Federal tax law tests.
A change in the death benefit option or Total Face Amount will often change the policy's limits under the Federal tax law test that you elected. To avoid having the policy cease to qualify as life insurance for tax purposes, we reserve the right to (i) refund policy value (if the guideline premium test was elected) or (ii) increase the death benefit (if the cash value accumulation test was elected), which may have the effect of increasing cost of insurance charges under the policy. Please read “Tax considerations” to learn about possible tax consequences of changing your insurance coverage under the policy.
Changing a payment option
You can change the payment option at any time before the proceeds are payable. If you haven’t made a choice, the payee of the proceeds has a prescribed period in which he or she can make that choice.
Tax impact of payment option chosen
There may be tax consequences to you or your beneficiary depending upon which payment option is chosen. You should consult with a qualified tax adviser before making that choice.
Premiums
Planned premiums
The Policy Specifications page of your policy will show the “Planned Premium” for the policy. You choose this amount in the policy application. You will also choose how often to pay premiums—annually, semi-annually or quarterly. You may also choose to pay premiums by monthly electronic funds transfers. The premium reminder notice we send you is based on the amount and period you choose. However, payment of Planned Premiums is not necessarily required. You need only pay enough premium to keep the policy in force (see “Lapse and reinstatement”).
Minimum initial premium
The Minimum Initial Premium is set forth in the Policy Specifications page of your policy. After the payment of the initial premium, premiums may be paid at any time and in any amount until the insured person's attained age 121, subject to the need to pay enough premium to keep the policy in force, and to the limitations on maximum premium amount described below.
Maximum premium payments
Federal tax law limits the amount of premium payments you can make relative to the amount of your policy’s insurance coverage. We will not knowingly accept any amount by which a premium payment exceeds this limit. If you exceed certain other limits, the law may impose a penalty on amounts you take out of your policy. If our receipt of any premium payment would cause the policy to be treated as a Modified Endowment Contract under the Federal tax laws, we will only process the
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payment on the first Business Day after we have received satisfactory written instructions from you. More discussion of these tax law requirements is provided under “Tax considerations.”
Large premium payments may expose us to unanticipated investment risk. In addition, in order to limit our investment risk exposure under certain market conditions, we may refuse to accept additional premium payments. This may be the case, for example, in an environment of decreasing interest rates, where we may not be able to acquire investments for our general account that will sufficiently match the liabilities we are incurring under our fixed account guarantees. Excessive allocations may also interfere with the effective management of our variable investment accounts, if we are unable to make an orderly investment of the additional premium into the variable investment accounts. Also, we may refuse to accept or limit an amount of premium if the amount of the premium would increase our insurance risk exposure, and the insured person doesn't provide us with adequate evidence that he or she continues to meet our requirements for issuing insurance.
We will notify you in writing of our refusal to accept premium under these provisions within three days following the date that it is received by us, and will promptly thereafter take the necessary steps to return the premium to you. Notwithstanding the foregoing limits on the premium that we will accept, we will not refuse to accept any premium necessary to prevent the policy from terminating.
Processing premium payments
No premiums will be accepted prior to our receipt of a completed application at our Service Office. All premiums received prior to the Issue Date of the policy will be held in the general account and credited with interest from the date of receipt at the rate of return then being earned on amounts allocated to the Money Market investment account. After the Issue Date but prior to the Allocation Date, net premiums received are allocated to the Money Market variable investment account. The “Allocation Date” of the policy is the tenth day after the Issue Date. The Issue Date is shown on the Policy Specifications page of the policy. On the Allocation Date, the Net Premiums paid plus interest credited, if any, will be allocated among the variable investment accounts, the indexed accounts or the fixed account in accordance with the policy owner's instructions. The “Net Premium” is the premium paid less the applicable premium charges we deduct from it.
Any Net Premium received on or after the Allocation Date will be allocated among variable investment accounts, the indexed accounts or the fixed account as of the business day on or next following the date the premium is received at the Service Office. Monthly deductions are normally due on the Policy Date and at the beginning of each policy month thereafter. However, if the monthly deductions are due prior to the Contract Completion Date, they will be deducted from policy value on the Contract Completion Date instead of the dates they were due (see “Procedures for issuance of a policy” for the definition of “Contract Completion Date”).
Payment of premiums will not guarantee that the policy will stay in force. Conversely, failure to pay premiums will not necessarily cause the policy to lapse. However, in states where permitted, the policy will have a No-Lapse Guarantee which would prevent the policy from lapsing during the guarantee period, provided certain criteria are satisfied.
Ways to pay premiums
If you pay premiums by check or money order, they must be drawn on a U.S. bank in U.S. dollars and made payable to “John Hancock.” We will not accept credit card checks. We will not accept starter or third party checks if they fail to satisfy our administrative requirements. Premiums after the first must be sent to the John Hancock USA Service Office at the appropriate address shown on the back cover of this prospectus.
We will also accept premiums:
•  by wire or by exchange from another insurance company, or
•  via an electronic funds transfer program (any owner interested in making monthly premium payments must use this method).
Lapse and reinstatement
Lapse
Unless the No-Lapse Guarantee is in effect, a policy will go into default if at the beginning of any policy month the policy's net cash surrender value would be zero or below after deducting the monthly deductions then due. Therefore, a policy could lapse eventually if increases in policy value (prior to deduction of policy charges) are not sufficient to cover policy
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charges. A lapse could have adverse tax consequences as described under “Tax considerations.” We will notify you of the default and will allow a 61-day grace period in which you may make a premium payment sufficient to bring the policy out of default. The required payment will be equal to the amount necessary to bring the net cash surrender value to zero, if it was less than zero on the date of default, plus an amount equal to three times the monthly deductions due on the date of default, plus any applicable premium charge. If the required payment is not received by the end of the grace period, the policy will terminate (i.e., “lapse”) with no value.
No-lapse guarantee
In those states where it is permitted, as long as the cumulative premium test is satisfied during the No-Lapse Guarantee Period, as described below, and the policy value is greater than the policy debt, we will guarantee that the policy will not go into default, even if adverse investment experience or other factors should cause the policy's surrender value to fall to zero or below during such period.
The monthly No-Lapse Guarantee Premium is one-twelfth of the No-Lapse Guarantee Premium. The No-Lapse Guarantee Premium is not a charge assessed against the policy value. It is an amount used in determining whether the cumulative premium test has been satisfied.
The No-Lapse Guarantee Premium is set at issue on the basis of the Base Face Amount and any Supplemental Face Amount and reflects the age, sex and risk class of the proposed insured as well as any additional rating and supplementary benefits, if applicable. It is subject to change if (i) the Total Face Amount of the policy is changed, (ii) there is a decrease in the Face Amount of insurance, or (iii) there is any change in the supplementary benefits added to the policy or in the risk classification of the insured person.
The No-Lapse Guarantee Period is set at issue and is stated in the policy. The No-Lapse Guarantee Period for any Supplemental Face Amount is the first five policy years. Certain state limitations may apply, but generally the No-Lapse Guarantee Period for the Base Face Amount is (i) the lesser of fifteen years or to age 70 or (ii) seven years if the insured person's issue age is 65 or older. The No-Lapse Guarantee Period for the Base Face Amount under any policy that has elected an increasing Supplemental Face Amount or a Return of Premium Death Benefit Rider, however, is limited to the first five policy years.
While the No-Lapse Guarantee is in effect, we will determine at the beginning of the policy month that your policy would otherwise be in default whether the cumulative premium test, described below, has been met. If the test has not been satisfied, we will notify you of that fact and allow a 61-day grace period in which you may make a premium payment sufficient to keep the policy from terminating. This required payment, as described in the notification, will be equal to the lesser of:
(a)  the greater of the outstanding premium requirement to satisfy the cumulative premium test at the date of default and the amount necessary to bring the policy value (net of any loans) to zero, plus the monthly No-Lapse Guarantee Premium due for the next three policy months, or
(b)  the amount necessary to bring the Net Cash Surrender Value to zero plus an amount equal to three times the monthly deductions due on the date of default, plus the applicable premium charge.
If the required payment is not received by the end of the grace period, the No-Lapse Guarantee and the policy will terminate. If the No-Lapse Guarantee for the Supplemental Face Amount is no longer in effect, you make the required payment under (a) described above, and the payment under (a) is less than the payment calculated in (b) above, only the Base Face Amount will remain in effect, and any Supplemental Face Amount will terminate as of the end of the grace period. If you want to maintain both the Base Face Amount and the Supplemental Face Amount, you will need to make a payment that is at least equal to that described in (b) above.
Cumulative premium test
The cumulative premium test is satisfied if, as of the beginning of the policy month that your policy would otherwise be in default, the sum of all premiums paid to date less any withdrawals taken on or before the date of the test and less any policy debt is equal to or exceeds the sum of the monthly No-Lapse Guarantee Premium due from the Policy Date to the date of the test.
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Death during grace period
If the insured person should die during the grace period, the policy value used in the calculation of the death benefit will be the policy value as of the date of default and the death benefit will be reduced by any outstanding monthly deductions due at the time of death.
Reinstatement
By making a written request, you can reinstate a policy that has gone into default and terminated at any time within the three-year period following the date of termination subject to the following conditions:
(a)  You must provide to us evidence of the insured person's insurability that is satisfactory to us; and
(b)  You must pay a premium equal to the amount that was required to bring the policy out of default immediately prior to termination, plus the amount needed to keep the policy in force for at least the next three policy months.
If the reinstatement is approved, the date of reinstatement will be the later of the date we approve your request or the date the required payment is received at our Service Office. In addition, any surrender charges will be reinstated to the amount they were at the date of default. The policy value on the date of reinstatement, prior to the crediting of any Net Premium paid in connection with the reinstatement, will be equal to the policy value on the date the policy terminated. Any policy debt not paid upon termination of a policy will be reinstated if the policy is reinstated.
Generally, the suicide exclusion and incontestability provisions will apply from the effective date of reinstatement. A surrendered policy cannot be reinstated.
The policy value
From each premium payment you make, we deduct the applicable premium charges described under “Deduction from premium payments.” We invest the rest (known as the “Net Premium”) in the variable investment accounts, the indexed accounts or any fixed account you've elected. Special investment rules apply to premiums processed prior to the Allocation Date (see “Premiums—Processing premium payments”).
Over time, the amount you've invested in any variable investment account will increase or decrease the same as if you had invested the same amount directly in the corresponding underlying portfolio and had reinvested all portfolios' dividends and distributions in additional portfolio shares, except that we will deduct certain additional charges which will reduce your policy value. We describe these charges under “Description of charges at the policy level.” For certain policy years, we will apply a policy credit to your policy value (see “Policy credit”).
We calculate the unit values for each variable investment account once every business day as of the close of trading on the New York Stock Exchange, usually 4:00 p.m. Eastern time. Sales and redemptions within any variable investment account will be transacted using the unit value next calculated after we receive your request either in writing or other form that we specify. If we receive your request before the close of our business day, we'll use the unit value calculated as of the end of that business day. If we receive your request at or after the close of our business day, we'll use the unit value calculated as of the end of the next business day. If a scheduled transaction falls on a day that is not a business day, we'll process it as of the end of the next business day.
The amount you've invested in the fixed account will earn interest at the rates we declare from time to time. For the fixed account, we guarantee that this rate will be at least 2%. If you want to know what the current declared rate is for the fixed account, just call or write to us. For any indexed account that you elect, an index segment interest credit will be calculated using a formula described in your policy that references the S&P 500 and indexed account parameters. There is no guarantee that index segment interest credit will be greater than 0.25% at the segment maturity date (see “The indexed account”).
The asset-based risk charge only applies to that portion of the policy value held in the variable investment accounts. The charge determined does not apply to the fixed account or the indexed accounts. Otherwise, the policy level charges applicable to the fixed account and the indexed accounts are the same as those applicable to the variable investment accounts.
Policy credit
On the first day of each policy month, beginning in the Policy Credit Commencement Year and continuing for 20 years, we will calculate a “policy credit” to be applied to the variable investment accounts, the fixed account and indexed accounts
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in the same manner as we take monthly deductions from these accounts. Policy credits are not applied to amounts in the loan account. The policy credit equals the Policy Credit Rate times the lesser of the policy value or the Policy Credit Limit. The Policy Credit Limit is equal to the Total Face Amount at Issue plus any amount payable under a supplementary benefit rider plus the policy value, minus the death benefit and any outstanding policy debt. The Policy Credit Commencement Year varies by issue age. The Policy Credit Rate and the Policy Credit Commencement Year are identified in the Policy Specifications.
Allocation of future premium payments and indexed account segment proceeds
At any time, you may change the variable investment accounts, the indexed accounts or any fixed account in which future premium payments will be invested. You make the original allocation in the application for the policy. The percentages you select must be in whole numbers and must total 100%.
On the segment maturity date, the segment proceeds are allocated to the fixed account, indexed accounts or investment accounts in accordance with your allocation instructions. Changes made to your allocation instructions received by us after the lock in date will only apply to the segment proceeds on the next segment maturity date.
You may cancel your allocation to an indexed account by submitting a written request to us no later than the end of the business day on the lock in date. The lock in date is the 3rd business day prior to the segment initiation date (see “The indexed accounts”). A cancellation will result in a reallocation of amounts from the holding segment to the fixed account.
Transfers of existing policy value
You may also transfer your existing policy value from one variable investment account, an indexed account or any fixed account to another, subject to the limitations discussed below. To do so, you must tell us how much to transfer, either as a whole number percentage or as a specific dollar amount. A confirmation of each transfer will be sent to you. Without our approval, the maximum amount you may transfer to or from any variable investment account in any policy year is $1,000,000.
Market timing and disruptive trading practices
Variable investment accounts in variable life insurance products can be a prime target for abusive transfer activity because these products value their variable investment accounts on a daily basis and allow transfers among variable investment accounts without immediate tax consequences. As a result, some investors may seek to frequently transfer into and out of variable investment accounts or to make large transfers in reaction to market news or to exploit a perceived pricing inefficiency. Whatever the reason, long-term investors in any variable investment account can be harmed by large or frequent transfer activity. For example, such activity may expose the variable investment account's underlying portfolio to increased portfolio transaction costs and/or disrupt the portfolio manager's ability to effectively manage the portfolio's investments in accordance with the portfolio's investment objectives and policies. This could include causing the portfolio to maintain higher levels of cash than would otherwise be the case, or liquidating investments prematurely. Accordingly, frequent or large transfers may result in dilution with respect to interests held for long-term investment and adversely affect policy owners, beneficiaries and the underlying portfolios.
To discourage market timing and disruptive trading activity, we impose restrictions on transfers and reserve the right to change, suspend or terminate telephone, facsimile and internet transaction privileges (see “How you communicate with us”). We also reserve the right to impose a fee of up to $25 for any transfer beyond an annual limit (which will not be less than twelve). No transfer fee will be imposed on any transfer from a variable investment account into any fixed account if the transfer occurs during the following periods:
•  within 18 months after the policy's Issue Date, or
•  within 60 days after the later of the effective date of a material change in the investment objectives of any variable investment account or the date you are notified of the change.
In addition to the actions described above, we also reserve the right to take other actions at any time to restrict trading, including, but not limited to: (i) restricting the number of transfers made during a defined period, (ii) restricting the dollar amount of transfers, (iii) restricting transfers into and out of certain variable investment accounts, (iv) restricting the method used to submit transfers, and (v) deferring a transfer at any time we are unable to purchase or redeem shares of the underlying portfolio.
We may also impose additional administrative conditions upon, or prohibit a transfer request made by a third party giving instructions on behalf of multiple policies, whether owned by the same owner or different owners. If you engage a third party for asset allocation services, then you may be subject to these transfer restrictions because of the actions of that
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party in providing those services. We will notify the third party you have engaged if we exercise this right. While we seek to identify and prevent disruptive trading activity, it may not always be possible to do so. Therefore, no assurance can be given that the restrictions we impose will be successful in preventing all disruptive trading and avoiding harm to long-term investors.
Limitations on transfers to or from a variable investment account. Our current practice is to restrict transfers into or out of variable investment accounts to two per calendar month (except with respect to those policies described in the following paragraphs). For purposes of this restriction, and in applying the limitation on the number of free transfers, any transfers made during the period from the opening of a business day (usually 9:00 a.m. Eastern time) to the close of that business day (usually 4:00 p.m. Eastern time) are considered one transfer. You may, however, transfer to the Money Market variable investment account even if the two transfers per month limit has been reached, but only if 100% of the account value in all variable investment accounts is transferred to the Money Market variable investment account. If such a transfer to the Money Market variable investment account is made, then for the 30 calendar day period after such transfer no transfers from the Money Market variable investment account to any other variable investment account, any indexed account or any fixed account may be made. If your policy offers a dollar cost averaging or automatic asset allocation rebalancing program, any transfers pursuant to such program are not considered transfers subject to these restrictions on frequent trading. The restrictions described in this paragraph will be applied uniformly to all policy owners subject to the restrictions.
Policies such as yours may be purchased by a corporation or other entity as a means to informally finance the liabilities created by an employee benefit plan, and to this end the entity may aggregately manage the policies purchased to match its liabilities under the plan. Policies sold under these circumstances are subject to special transfer restrictions. In lieu of the two transfers per month restriction, we will allow the policy owner under these circumstances to rebalance the variable investment accounts in its policies within the following limits: (i) during the 10 calendar day period after any policy values are transferred from one variable investment account into a second variable investment account, the values can only be transferred out of the second variable investment account if they are transferred into the Money Market variable investment account; and (ii) any policy values that would otherwise not be transferable by application of the 10 day limit described above and that are transferred into the Money Market variable investment account may not be transferred out of the Money Market variable investment account into any other variable investment account, indexed account, or any fixed account for 30 calendar days. The restrictions described in this paragraph will be applied uniformly to all policy owners subject to the restrictions.
Subject to our approval, we may offer policies purchased by a corporation or other entity that has purchased policies to match its liabilities under an employee benefit plan, as described above, the ability to electronically rebalance the variable investment accounts in its policies. Under these circumstances, in lieu of imposing any specific limit upon the number and timing of transfers, we will monitor aggregate trades among the subaccounts for frequency, pattern and size for potentially harmful investment practices. If we detect trading activity that we believe may be harmful to the overall operation of any variable investment account or underlying portfolio, we may impose conditions on policies employing electronic rebalancing to submit trades, including setting limits upon the number and timing of transfers, and revoking privileges to make trades by any means other than written communication submitted via U.S. mail. While we seek to identify and prevent disruptive frequent trading activity, it may not always be possible to do so. Therefore no assurance can be given that the restrictions we impose will be successful in preventing all disruptive frequent trading and avoiding harm to long-term investors. The restrictions described in these paragraphs will be applied uniformly to all policy holders subject to the restrictions.
Rule 22c-2 under the 1940 Act requires us to provide tax identification numbers and other policy owner transaction information to the Trust or to other investment companies in which the Separate Account invests, at their request. An investment company will use this information to identify any pattern or frequency of variable investment account transfers that may violate their frequent trading policy. An investment company may require us to impose trading restrictions in addition to those described above if violations of their frequent trading policy are discovered.
Limitations on transfers out of the fixed account. Transfers out of the fixed account option in any one policy year are limited to the greater of (i) the fixed account maximum transfer amount of $2,000, (ii) the fixed account maximum transfer percentage of 15% multiplied by the amount of the fixed account on the immediately preceding policy anniversary, or (iii) the amount transferred out of the fixed account during the previous policy year. Any transfer out of the fixed account may not involve a transfer to the Money Market variable investment account.
We reserve the right to impose a minimum amount limit on transfers out of any fixed account. We also reserve the right to impose different restrictions on any additional fixed account that we may offer in the future.
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We may waive the transfer restrictions on the fixed account. Please contact us or your John Hancock USA representative to find out if a waiver is currently in effect.
Limitations on transfers to and from an indexed account. You may transfer policy value from any indexed account to a variable investment account, a fixed account or another indexed account only on a segment maturity date. You may set up transfer instructions at the time you elect to invest in any indexed account and may change the instructions at any time subject to the lock in date.
Dollar cost averaging. We may offer policy owners a dollar cost averaging (“DCA”) program. Under the DCA program, you will designate an amount that will be transferred monthly from one variable investment account into any other variable investment account, a fixed account, or a holding segment of an indexed account until the amounts are designated to a segment of the indexed account (see “The indexed accounts”). If insufficient funds exist to effect a DCA transfer, the transfer will not be effected and you will be so notified. No fee is charged for this program. This program may be used in conjunction with the asset allocation balancer transfer program detailed below.
We reserve the right to cease to offer this program as of 90 days after written notice is sent to you.
Asset allocation balancer transfers. Under the asset allocation balancer program you will designate an allocation of policy value among variable investment accounts. We will move amounts among the variable investment accounts at specified intervals you select - annually, semi-annually, quarterly or monthly. A change to your premium allocation instructions will automatically result in a change in asset allocation balancer instructions so that the two are identical unless you either instruct us otherwise or have elected the dollar cost averaging program. No fee is charged for this program. This program may be used in conjunction with the DCA program detailed above. However, this program only applies to policy value in the variable investment accounts.
We reserve the right to cease to offer this program as of 90 days after written notice is sent to you.
Surrender and withdrawals
Surrender
You may surrender your policy in full at any time. If you do, we will pay you the policy value less any policy debt and surrender charge that then applies. This is called your “net cash surrender value.” You must return your policy when you request a surrender. We will process surrenders on the day we receive the surrender request (unless such day is not a business day, in which case we will process surrenders as of the business day next following the date of the receipt).
Withdrawals
After the first policy year, you may take a withdrawal of part of your net cash surrender value once in each policy month. Generally, each withdrawal must be at least $500. We will automatically reduce the policy value by the amount of the withdrawal. If you have a policy value allocated to the indexed accounts at the time of the withdrawal, each variable investment account and any fixed account will be reduced in the same proportion as the policy value that is then allocated among them. If insufficient value exists from the fixed account and variable investment accounts to cover the withdrawal, policy value will be deducted from the holding segment. If insufficient policy value exists in the holding segment, policy value will be deducted from indexed account segments on a pro-rata basis. We will not permit a withdrawal if it would cause your surrender value to fall below three months’ worth of monthly deductions (see “Deductions from policy value”). We reserve the right to refuse any withdrawal that would cause the policy’s Base Face Amount to fall below $50,000.
When you take a withdrawal (that is not a systematic withdrawal) from a segment of an indexed account prior to the segment maturity date, a “lock-out period” will be imposed upon the creation of new segments. The duration of the lock-out period is twelve consecutive months. During the lock-out period, any portion of policy value in a holding segment, as well as any additional amounts allocated or transferred to an indexed account, will not be designated to a new segment until the first segment initiation date following the lock-out period.
Because it reduces the policy value, any withdrawal will reduce your death benefit under either Option 1 or Option 2 (see “The death benefit”). Under Option 1, such a withdrawal may also reduce the Total Face Amount. Generally, any such reduction in the Total Face Amount will be implemented by first reducing any Supplemental Face Amount then in effect. We reserve the right to approve reductions in the Base Face Amount prior to eliminating the Supplemental Face Amount. You should consider a number of factors in determining whether to continue coverage in the form of Base Face Amount or
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Supplemental Face Amounts (see “Base Face Amount vs. Supplemental Face Amount”). A reduction in Base Face Amount or Supplemental Face Amount will result in a reduction of the charge associated with that component of the coverage. If such a reduction in Total Face Amount would cause the policy to fail the Internal Revenue Code’s definition of life insurance, we will not permit the withdrawal.
Policy loans
You may borrow from your policy at any time by completing a form satisfactory to us. The maximum amount you can borrow is the greater of (i) 90% of net cash surrender value and (ii) the net cash surrender value projected to the next policy anniversary, assuming interest earned at the guaranteed minimum fixed account rate and loan interest charged at the current effective annual rate.
The minimum amount of each loan is $500. Unless otherwise specified by you, the amount of the loan is deducted from the variable investment accounts and any fixed account in the same proportion as the policy value is then allocated among them. The amount of the loan is then placed in a special loan account. The maximum effective annual interest rate we can charge for the loan account is 3.25% for policy years 1-10 and 2.25% for policy years 11 and thereafter. Accrued interest will be added to the loan daily and will bear interest at the same rate as the original loan amount. The minimum interest that the loan account will earn at any time is equal to the difference between the annual interest rate we charge for the loan minus the Maximum Loan Interest Credited Differential. The Maximum Loan Interest Credited Differential is the difference between the annual interest rate we charge for the loan minus the interest rate we credit for the loan, however, it will never be greater than 2%. For example, if the annual interest rate we charge for a loan is 3%, we cannot credit interest at a rate less than 1% because the difference between the interest rate charged for the loan and the interest rate credited to the loan cannot be more than the Maximum Loan Interest Credited Differential, which is 2%.
If the policy value in the variable investment accounts and any fixed account is not sufficient to cover the amount of the loan, we will next transfer value from the holding segment to the loan account. Amounts transferred from the holding segment to the loan account are credited and charged interest in the same manner as described above. If there is insufficient value in the holding segment to complete the transfer, we will then use the policy value in any indexed account as collateral for the remaining amount. The policy value used as collateral for the loan in the indexed account will not be reduced as a result of the loan. This means an amount equal to the loan will not be transferred from the indexed account to the loan account. Instead, the policy value will remain in the indexed account segment, where those segments will earn index segment interest credit upon the segment maturity date rather than earning interest in the same manner as amounts transferred to the loan account, as described above. The maximum effective annual interest rate we can charge for the policy value in the indexed account that is collateral for a loan is 3.25% for policy years 1- 10 and 2.25% for policy years 11 and thereafter.
The tax consequences of a loan interest credited differential of 0% are unclear. You should consult a tax adviser before effecting a loan to evaluate possible tax consequences. If we determine that a loan will be treated as a taxable distribution because of the differential between the loan interest rate and the rate being credited on the special loan account, we reserve the right to increase the rate charged on the loan to a rate that would, in our reasonable judgment, result in the transaction being treated as a loan under Federal tax law. The right to increase the rate charged on the loan is restricted in some states. Please see your John Hancock USA representative for details. We process policy loans as of the business day on or next following the day we receive the loan request.
Repayment of policy loans
You can repay all or part of a loan at any time. Each repayment will be allocated among the accounts as set out below.
•  The repayment will first be applied to reduce any loan amount collateralized by the indexed accounts.
•  If any loan repayment remains, it will then be applied to the policy value by transferring amounts from the loan account to the other accounts as follows:
•  First, an amount will be transferred to the fixed account that is equal to the remaining loan repayment multiplied by the ratio of the amount borrowed from the fixed account divided by the sum of the amounts borrowed from the fixed account and the variable investment accounts, if any.
•  The remainder of the repayment, if any, will be allocated among the accounts in the same way a new premium payment would be allocated (unless otherwise specified by you).
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If you want a payment to be used as a loan repayment, you must include instructions to that effect. Otherwise, all payments will be assumed to be premium payments. We process loan repayments as of the day we receive the repayment. Loan repayments received prior to the close of the New York Stock Exchange will be applied on the same day it was received. Loan repayments received after the close of the New York Stock Exchange will be applied as of the next business day.
Effects of policy loans
The policy value, the net cash surrender value, and any death benefit are permanently affected by any loan, whether or not it is repaid in whole or in part. This is because the amount of the loan is deducted from the variable investment accounts or any fixed account and placed in a special loan account. The variable investment accounts or any fixed account and the special loan account will generally have different rates of investment return. Similarly, the amount of the loan collateralized by any indexed account will have a different net rate of return than any un-loaned amounts in the same indexed accounts.
The amount of the outstanding loan (which includes accrued and unpaid interest) is subtracted from the amount otherwise payable when the policy proceeds become payable.
Taking a loan on the policy increases the risk that the policy may lapse because of the difference between the interest rate charged on the loan and the interest rate credited to the special loan account. When a loan is outstanding, the amount in the loan account is not available to help pay for any policy charges. If, after deducting your policy loan, there is not enough policy value to cover the policy charges, your policy could lapse. Also, whenever the outstanding loan equals or exceeds your policy value after the insured person reaches age 121, the policy will terminate 31 days after we have mailed notice of termination to you (and to any assignee of record at such assignee’s last known address) specifying the amount that must be paid to avoid termination, unless a repayment of at least the amount specified is made within that period. Policy loans may also result in adverse tax consequences under certain circumstances (see “Tax considerations”).
Description of charges at the policy level
Deduction from premium payments
•  Premium charge - A charge to help defray our sales costs and related taxes A maximum premium charge of 7% is deducted from all premiums paid in policy years 1-20. A maximum premium charge of 2% is deducted from all premiums paid in policy years 21 and thereafter. We will stop accepting premium payments at and after the life insured's age 121 (see “Coverage at and after age 121”).
Deductions from policy value
•  Administrative charge - A monthly charge to help cover our administrative costs. This is a flat dollar charge of $20 per month that will cease at and after the insured person reaches age 121.
•  Base Face Amount charge - A monthly charge for a minimum duration of 15 years and maximum duration of 55 years, which primarily helps cover sales costs. To determine the charge we multiply the amount of Base Face Amount at issue by a rate that varies by the insured person's sex, age, and risk classification at issue.
•  Supplemental Face Amount charge - A monthly charge for a minimum duration of 15 years and maximum duration of 55 years, which primarily helps cover sales costs. To determine the charge we multiply the greater of the amount of Supplemental Face Amount at issue and the amount of Supplemental Face Amount by a rate that varies by the insured person's sex, age, and risk classification at issue.
•  Cost of insurance charge - A monthly charge for the cost of insurance. To determine the charge, we multiply the net amount of insurance for which we are then at risk by a cost of insurance rate. The rate is derived from an actuarial table. The table in your policy will show the maximum cost of insurance rates. The cost of insurance rates that we currently apply are generally less than the maximum rates, and the current rates will never be more than the maximum rates shown in the policy. Cost of insurance charges will cease at and after the insured person reaches age 121. The cost of insurance rates we use will depend on the age at issue, the insurance risk characteristics and (usually) sex of the insured person, and the length of time the policy has been in effect. Regardless of the table used, cost of insurance rates generally increase each year that you own your policy, as the insured person's age increases. (The insured person's “age” on any date is his or her age on the birthday nearest that date.) For death benefit Option 1, the net amount at risk is equal to the greater of zero, or the result of (a) minus (b) where:
(a)  is the death benefit as of the first day of the Policy Month, divided by 1.0016516; and
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(b)  is the policy value as of the first day of the Policy Month after the deduction of all other monthly deductions.
Since the net amount at risk for death benefit Option 1 is based on a formula that includes as factors the death benefit and the policy value, the net amount at risk is affected by the investment performance of the variable investment accounts chosen, payment of premiums and charges assessed.
If the minimum death benefit is greater than the Total Face Amount, the cost of insurance charge will reflect the amount of that additional benefit.
For death benefit Option 2, the net amount at risk is equal to the Total Face Amount of insurance divided by 1.0016516.
•  Asset-based risk charge - A monthly charge to help cover sales, administrative and other costs. The charge is a percentage of that portion of your policy value allocated to variable investment accounts. This charge does not apply to the current fixed account or the indexed accounts. We do not currently impose this charge, but reserve the right to do so in the policy. Any charge would cease at and after the insured person reaches age 121.
•  Supplementary benefit rider charges - A charge for any supplementary insurance benefits added to the policy by means of a rider. Charges for applicable riders are shown in the rider’s provisions or the Policy Specifications (see “Fee Table – Rider Charges”).
•  Loan interest rate - We will charge interest on any amount you borrow from your policy. The interest charged on any loan is an effective annual rate of 3.25% in the first ten policy years and 2.25% thereafter (see “Policy loans”).
•  Transfer fee - We currently do not impose a fee upon transfers of policy value among the variable investment accounts, but reserve the right to impose a fee of up to $25 for any transfer beyond an annual limit (which will not be less than 12) to compensate us for the costs of processing these transfers (see “Market timing and disruptive trading practices”).
•  Surrender charge – A charge we deduct if the policy lapses or is surrendered. We deduct this charge to compensate us for sales expenses that we would otherwise not recover in the event of early lapse or a surrender. The surrender charge amount is determined by a formula that is set out in your policy, and is impacted by your age, sex, risk classification, Base Face Amount and duration. The surrender charge decreases each month and becomes zero at the end of the fifteenth policy year.
The surrender charge is equal to the Maximum Percentage of Surrender Charge, shown below and in the Policy Specifications, multiplied by a charge for the Base Face Amount at issue indicated in the Policy Specifications. In no event will the surrender charge be less than zero.
The table below shows the applicable Maximum Percentage of Surrender Charge at the beginning of each year during the Surrender Charge Period. The Maximum Percentage of Surrender Charge is proportionately reduced at the beginning of each month of the year until the next year is reached. The table below applies only if the insured person is age 45 at issue.
Year in Surrender
Charge Period 		  Maximum Percentage
of Surrender Charge
1
   [100.00]%
2
   [98.00]%
3
   [96.00]%
4
   [95.00]%
5
   [93.00]%
6
   [87.00]%
7
   [84.00]%
8
   [72.00]%
9
   [59.00]%
10
   [44.00]%
11
   [39.00]%
12
   [34.00]%
13
   [29.00%]
14
   [24.00%]
15
   [19.00%]
16+
   0.00%
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Additional information about how certain policy charges work
Sales expenses and related charges
The premium and Base Face Amount charges help to compensate us for the cost of selling our policies (see “Description of charges at the policy level”). The amount of the charges in any policy year does not specifically correspond to sales expenses for that year. We expect to recover our total sales expenses over the life of the policies. To the extent that the premium and Base Face Amount charges do not cover total sales expenses, the sales expenses may be recovered from other sources, including the asset-based risk charge and other charges with respect to the policies, or from our general assets. Similarly, administrative expenses not fully recovered by the administrative charge may also be recovered from such other sources.
Method of deduction
Unless we agree otherwise or you do not have sufficient funds in any fixed account, indexed account or variable investment accounts, we deduct the monthly deductions described in the Fee Tables section from your policy’s variable investment accounts, the indexed accounts and any fixed account in proportion to the amount of policy value you have in each of those accounts.
Special purchase programs for eligible classes
With respect to policies issued to a class of associated individuals or to a trustee, employer or similar entity where we anticipate that the sales to the members of the class will result in lower than normal sales or administrative expenses, lower taxes or lower risks to us, we may offer the policies with reduced charges or with additional or enhanced features or benefits. We will make these programs available in accordance with our established administrative procedures in effect at the time of the application for a policy. The factors we consider in determining the eligibility of a particular group for such a program are: (i) the nature of the association and its organizational framework; (ii) the method by which sales will be made to the members of the class; (iii) the facility with which premiums will be collected from the associated individuals and the association's capabilities with respect to administrative tasks; (iv) the anticipated lapse and surrender rates of the policies; (v) the size of the class of associated individuals and the number of years it has been in existence; (vi) the aggregate amount of premiums paid; and (vii) any other such circumstances which result in a reduction in sales or administrative expenses, lower taxes or lower risks. Any reduction in charges or feature or benefit enhancement will be reasonable and will apply uniformly to all prospective policy purchasers in the class and will not unfairly discriminate against any owner.
The Statement of Additional Information (the “SAI”) contains additional information about any special purchase program we currently make available. For information as to how you may obtain a copy of the SAI, please see the last page of this prospectus.
Other charges we could impose in the future
Except for a portion of the premium charge, we currently make no charge for our Federal income taxes. However, if we incur, or expect to incur, income taxes attributable to any subaccount of the Separate Account or this class of policies in future years, we reserve the right to make a charge for such taxes. Any such charge would reduce what you earn on any affected accounts. However, we expect that no such charge will be necessary.
A portion of the premium charge is used to cover premium taxes. Premium taxes vary by jurisdiction and are subject to change. Currently, premium tax levels range from 0% to 3.5%.
Under current laws, we may incur state and local taxes (in addition to premium taxes) in several states. At present, these taxes are not significant. If there is a material change in applicable state or local tax laws, we may make charges for such taxes.
Description of charges at the portfolio level
The portfolios must pay investment management fees and other operating expenses. These fees and expenses (shown in the tables of portfolio annual expenses under “Fee Tables”) are different for each portfolio and reduce the investment return of each portfolio. Therefore, they also indirectly reduce the return you will earn on any variable investment accounts you select. Expenses of the portfolios are not fixed or specified under the terms of the policy, and those expenses may vary from year to year.
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Coverage at and after age 121
Provided the policy is in force at and after the life insured's age 121:
•  We will stop accepting any premium payments.
•  We will no longer take monthly deductions for charges identified in the Fee Table of this prospectus.
•  We will continue to credit interest to a fixed account and indexed accounts.
•  We will continue to charge and credit loan interest on any outstanding loan.
•  We will continue to accept loan repayments on existing loans.
•  We will allow new segments to be created
•  We will no longer apply the policy credit to the policy value.
•  We will not allow any withdrawals.
•  We will continue to allow any new loans.
Other policy benefits, rights and limitations
Optional supplementary benefit riders you can add
When you apply for a policy, you can request any of the optional supplementary benefit riders that we then make available. Availability of any rider, the benefits it provides and the charges for it may vary by state. Our rules and procedures will govern eligibility for any rider and, in some cases, the configuration of the actual rider benefits. Each rider contains specific details that you should review before you decide to choose the rider. Charges for most riders will be deducted from the policy value. We may change these charges (or the rates that determine them), but not above any applicable maximum amount stated in the Policy Specifications page of your policy. We may add to, delete from or modify the list of optional supplementary benefit riders (see “Fee Table – Rider Charges”).
•  Healthy Engagement Rider - Our Healthy Engagement Rider provides you with the opportunity to add credits (as described below) to your policy value based upon the insured’s ongoing participation in activities that promote a healthy lifestyle.
Healthy engagement “Status” categories. If you elect this rider, the insured person will qualify for one of four healthy engagement status (“Status”) categories each year. The Status categories are based on the longevity benefits of certain healthy activities in which the insured person engages (such as regular checkups, biometric screenings, exercising regularly, participating in health educational programs, and periodically considering and answering certain health-related questions) and other health-related information about the insured person. The insured person’s Status category may change from year to year. (Current information relating to the insured person’s Status and/or the standards for determining Status are available through our Service Office at 1-800-387-2747.)
Beginning in the second policy year, if the insured person has qualified for one of the three highest Status categories, we will contribute a percentage of your policy’s monthly cost of insurance charge in the form of a credit (a “Rider Credit”) to your policy value, subject to the conditions mentioned below. Any Rider Credits will be allocated automatically to each variable investment account, indexed account or any fixed account from which, and in the same proportion as, we are taking your monthly deductions. The Healthy Engagement Rider also provides the insured person with the possibility of other benefits, including discounted wearable devices, gear used to engage in healthy activities, biometric screenings, access to health and fitness information, and other discounts and offers that depend on the insured person having a certain Status. These and any other benefits available pursuant to the rider, are designed to encourage a high level of engagement by the insured person in activities that are correlated with improved longevity.
Under the Healthy Engagement Rider, several considerations are relevant to the percentage, if any, of any month’s cost of insurance charge that we will contribute as a Rider Credit to your policy. One important consideration is the insured person’s Status category for the current year and for prior years. If the insured person has always been in the lowest Status category, no Rider Credits will be paid. The higher the insured person’s Status category, and the more years the insured person qualifies for higher Status categories, the larger your Rider Credits are likely to be.
Also, the Rider Credit that is contributed to your policy in any month will not be more than the difference between the maximum amount of cost of insurance charge that your policy permits us to deduct for that month and the amount of
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cost of insurance charge that we actually deduct for that month. This means that the amount of any Rider Credit will be less the closer we are to charging the maximum cost of insurance rate that the policy permits; and there will not be any Rider Credit if and when we are charging the maximum cost of insurance rate. We will continue to deduct the Healthy Engagement Rider charge in instances where no Rider Credits are being earned and we are charging the maximum cost of insurance rate under the policy. Although our ability to change the cost of insurance rate (subject to the maximum rate) can therefore affect whether and how much Rider Credit you may receive, no Rider Credits that we contributed to your policy value prior to such a change would be affected.
The amount of the Rider Credits that are contributed to your policy value in any month also will be reduced if the death benefit under your policy then exceeds $20,000,000. In such cases, the reduction in any Rider Credit will be larger as the death benefit at the time of such credit exceeds $20,000,000.
The amount of any Rider Credit for a month in which the policy is in default (as described under “Lapse and reinstatement”) will be applied first to pay any monthly deductions that are then due and unpaid and next to reduce the Default Payment, with any remaining amount then being contributed to your policy value in accordance with the allocation instructions then in effect for premium payments. The same procedure also will apply for any month in which the policy is being continued in force under it No-Lapse Guarantee provision, except that no amount will be applied to reduce a Default Payment.
We have the right to change at any time the qualification standards for Status categories. Such changes will be based on our expectations of the impact of those standards on future mortality, policy persistency, our expenses, our capital and reserve requirements, and our taxes relating to the policies. Any such changes, however, will be determined prospectively on a basis that does not discriminate unfairly within any class of insured persons. If we change the qualification standards for a Status level, it has an effect on the amount of Rider Credits you may earn for future months, but it will not affect the Rider Credits you have already earned. Also, we may change or terminate any other incentives (such as access to health and fitness information, offers, discounts, tools, or other services designed to encourage the insured to participate in activities that promote a healthy lifestyle) that we may make available from time to time to insured persons under the Healthy Engagement Rider.
If the Healthy Engagement Rider is still in effect on the later of the policy anniversary nearest the insured person’s 80th birthday or the 10th policy anniversary, the rider charge will cease to be deducted, no new Rider Credits will be earned and all previously earned Rider Credits will continue to apply as provided in the rider. The availability to the insured person of certain benefits may cease when the rider charge ceases.
You may elect to discontinue the rider at any time by written notice to us. In that case, the same circumstances described above will apply.
If your policy terminates for any reason, the Healthy Engagement Rider also will terminate, although no Rider Credits that we contributed to your policy value prior to the termination will be affected.
Although the standards for determining a Status category may be administered directly by us or through an affiliated or unaffiliated provider that we designate, any termination or change in such third-party provider will not terminate or modify the Healthy Engagement Rider or our obligations thereunder.
There may be costs associated with meeting the standards to qualify for a given Status level that will not be reimbursed by John Hancock USA. Examples of such costs include, but are not limited to, health coverage co-pays, health club fees, athletic events, health equipment, health monitoring devices, and athletic attire.
•  Critical Illness Benefit Rider - Our Critical Illness Benefit Rider is designed to pay the policy owner a one-time, lump sum benefit amount if the insured person is diagnosed for the first time with one of seven critical illnesses (as defined in the rider) (“Critical Illness”) while this rider is in force and after the waiting period has been satisfied, subject to all policy and rider provisions. However, if the Insured receives a first -time diagnosis for one of the Critical Illnesses before the rider is in force or during the rider's waiting period, then the policy owner will not receive benefits under this rider for that Critical Illness. Benefits under this rider will not begin until we receive proof of the insured person's initial diagnosis of a Critical Illness. Once the Critical Illness Benefit Amount has been paid, this rider will terminate. The Critical Illness Benefit Amount is an amount that is separate from the death benefit and may be used for any purpose. The charge for this rider is deducted each month from the Policy Value. Deductions for the rider charge will impact your cash surrender value under the policy. We will treat the monthly charges for the Critical Illness Rider as
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  distributions from your life insurance policy for Federal tax purposes. In addition, please note that there is a risk that benefits received by certain third-party owners under this rider may have adverse tax consequences (see “Tax considerations”).
The Critical Illness Benefit Amount is determined at issue, shown in the Policy Specifications, and equal to your election of either 10% or 25% of the Face Amount, subject to a $250,000 maximum. Once issued, you cannot change your Critical Illness Benefit Amount. However, any policy change that results in a reduction in the Face Amount will reduce your Critical Illness Benefit Amount proportionally.
If there is a reduction in the Face Amount, the new Critical Illness Benefit Amount will be equal to the lesser of (a) and (b), where:
(a)  is the Critical Illness Benefit Percent, shown in the Policy Specifications, multiplied by the Face Amount immediately after reduction of the Face Amount; and
(b)  is the Critical Illness Benefit Amount immediately before the reduction in Face Amount.
Any increases to the Face Amount will not result in a recalculation of the Critical Illness Benefit Amount.
Benefits under this rider do not reduce the Maximum Monthly Benefit Amount that is calculated under the Long-Term Care Benefit Rider.
Benefits paid under this rider do not provide or pay for the cost of medical care and are meant to be supplemental to health insurance that does pay for such costs. This rider is not a substitute for health insurance coverage, nor does it provide for supplemental coverage to Medicare. The benefits provided by this rider may not be coordinated with benefits provided by other coverage. Please review the benefits provided by this rider carefully to avoid possible duplication of coverage.
When this rider terminates, no further Rider Charge will be due and no Critical Illness Benefit Amount will be available.
•  Disability Payment of Specified Premium Rider - This rider will deposit the Specified Premium into the policy value of your policy each month during the total disability (as defined in the rider) of the insured person. There is a six month “waiting period” of total disability before deposits begin. Deposits continue until cessation of total disability but will cease at the insured person’s 65th birthday if total disability begins on or after the policy anniversary nearest the insured person’s 60th birthday. The “Specified Premium” is chosen at issue and will be stated in the Policy Specifications page of your policy.
•  Long-Term Care Rider - This rider provides for periodic advance payments to you of a portion of the death benefit if the insured person becomes “chronically ill” so that such person: (1) is unable to perform at least two activities of daily living without substantial human assistance or has a severe cognitive impairment; and (2) is receiving certain qualified services described in the rider. The decision to add this rider must be made at issuance of the policy. If you elect this rider, you will also have an option to apply to have a portion of the policy's death benefit advanced to you in the event of terminal illness. Please note that there is a significant risk that ownership of a policy with this rider by anyone other than the insured will cause adverse tax consequences (see “Tax considerations”).
Benefits under the Long-Term Care Rider will not begin until we receive proof that the insured person qualifies and has received “qualified long-term care service,” while the policy was in force. You must continue to submit evidence during the insured person's lifetime of the insured person's eligibility for rider benefits.
There is a maximum amount of death benefit that we will advance for each month of qualification. This amount, called the “Maximum Monthly Benefit Amount,” is equal to the amount of the death benefit that may be accelerated under the rider (as of the day the insured qualifies for benefits) multiplied by the Monthly Acceleration Percentage, which is the percentage of the death benefit you can accelerate each month. The Monthly Acceleration Percentage must be elected when you apply for the policy. The actual amount of any advance is based on the expense incurred by the insured person, up to the Maximum Monthly Benefit Amount, for each day of qualified long-term care service in a calendar month, as described in the rider. We will recalculate the Maximum Monthly Benefit Amount if you make a withdrawal of policy value, and for other events described in the rider. Each advance reduces the remaining death benefit under your policy, and causes a proportionate reduction in your policy value. If you have a policy loan, we will use a pro-rata portion of each death benefit advance to repay indebtedness. For example, if current indebtedness is
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$10,000, the death benefit is $100,000, and the gross advance is $2,000, then the net advance would be $1,800 = $2,000 X (1 - ($10,000/ $100,000)). As a result of the advance, the indebtedness will be reduced by $200.
We restrict your policy value's exposure to market risk when benefits are paid under the Long-Term Care Rider. We do this in several ways. First, before we begin paying any Monthly Benefit, we will transfer all policy value from the variable investment accounts and the indexed accounts (upon segment maturity date) to the fixed account. (The amount to be transferred will be determined on the business day immediately following the date we approve a request for benefits under the rider.) In addition, you will not be permitted to transfer policy value or allocate any additional premium payment to a variable investment account or an indexed account while rider benefits are paid. Your participation in any of the automatic investment plans will also be suspended during this period.
If the insured person no longer qualifies for rider benefits and your policy remains in force, you will be permitted to invest new premium payments in or transfer existing policy value to the variable investment accounts and the indexed accounts. (The restriction on transfers from the fixed account will continue to apply.) Benefits under this rider do not reduce the No-Lapse Guarantee Premium requirements that may be necessary for the No-Lapse Guarantee to remain in effect after a termination of rider benefits.
Finally, please note that there is a significant risk that ownership of a policy with this rider by anyone other than the insured person will cause adverse tax consequences. If the owner of the policy is not the insured person, benefit payments may be included in the owner's income, and the death benefit may be part of the estate of the insured person for purposes of Federal estate tax (see “Tax considerations”).
•  Long-Term Care Rider 2018 - This rider provides for periodic advance payments to you of a portion of the death benefit if the insured person becomes “chronically ill” so that such person: (1) is unable to perform at least two activities of daily living without substantial human assistance or has a severe cognitive impairment; and (2) is receiving certain Qualified Long-Term Care Services defined in the rider. The decision to add this rider must be made at issuance of the policy.
There is a significant risk that ownership of a policy with this rider by anyone other than the insured person will cause adverse tax consequences. If the owner of the policy is not the insured person, benefit payments may be included in the owner’s income, and the death benefit may be part of the estate of the insured person for purposes of Federal estate tax (see “Tax considerations”).
The maximum amount of death benefit that may be accelerated under this rider is the Accelerated Benefit Pool, which is equal to a percentage of the Face Amount at Issue. You can choose to accelerate between 1% and 100% of your death benefit.
Each advance payment under the rider reduces the remaining death benefit under your policy, and causes a proportionate reduction in your policy value. If you have a policy loan, we will use a pro-rata portion of each death benefit advance to repay indebtedness. For example, if current indebtedness is $10,000, the death benefit is $100,000, and the gross advance is $2,000, then the net advance would be $1,800 = $2,000 X (1 - ($10,000/ $100,000)). As a result of the advance, the indebtedness will be reduced by $200.
When the insured person qualifies for benefits under this rider, we will determine the Maximum Monthly Benefit Amount, which is the portion of the Accelerated Benefit Pool that you can accelerate each month to pay for Qualified Long-Term Care Services. The Maximum Monthly Benefit Amount is equal to the Accelerated Benefit Pool multiplied by the Monthly Acceleration Percentage. You can choose a Monthly Acceleration Percentage which is equal to 1%, 2% or 4%. The Monthly Acceleration Percentage must be selected when you apply for the policy and cannot be changed. We will recalculate the Maximum Monthly Benefit Amount and the Accelerated Benefit Pool if you make a withdrawal of policy value, and for other events described in the rider.
Rider benefits may also be used to pay for Stay at Home Services. At the time we receive Receipts for Stay at Home Services, we will determine the Stay at Home Lifetime Benefit Amount, which is the maximum amount that you can accelerate from the Accelerated Benefit Pool over the life of the policy to pay for Stay at Home Services. The Stay at Home Lifetime Benefit Amount is set equal to the Maximum Monthly Benefit Amount (as described above) in effect on the date you submit Receipts for Stay at Home Services. Stay at Home Services and Receipts for Stay at Home Services are defined in the rider.
Once the Accelerated Benefit Pool is exhausted, the rider will terminate and you will no longer receive advance payments pursuant to the rider.
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We restrict your policy value’s exposure to market risk when benefits are being paid under this rider. We do this in several ways. First, before we begin paying any benefits under this rider, we will transfer all policy value from the variable investment accounts and indexed accounts (upon segment maturity date) to the fixed account. (The amount to be transferred will be determined on the business day immediately following the date we approve a request for benefits under the rider.) In addition, you will not be permitted to transfer policy value or allocate any additional premium payment to a variable investment account or an indexed account while rider benefits are being paid. Your participation in any of the automatic investment plans will also be suspended during this period.
If the insured person no longer qualifies to receive periodic advance payments and your policy remains in force, you will be permitted to invest new premium payments in or transfer existing policy value to the variable investment accounts and indexed accounts. (The restriction on transfers from the fixed account will continue to apply.)
Finally, benefits paid under this rider do not reduce the No-Lapse Guarantee Premium requirements that may be necessary for the No-Lapse Guarantee to remain in effect after a termination of rider benefits.
•  Return of Premium Death Benefit Rider - You may elect to have your policy issued with an optional Return of Premium Death Benefit Rider. This rider provides an additional death benefit payable upon the death of the insured person. The Return of Premium Death Benefit has an initial value equal to your initial premium times the “Percentage of Premium” you select (which may range between 0% and 100%). We show the Percentage of Premium you select in the Policy Specifications page. This benefit is only available to you if you elect death benefit Option 1. It may not be used in conjunction with the Disability Payment of Specified Premium or the Long-Term Care Rider.
•  Cash Value Enhancement Rider - Your policy may be issued with the Cash Value Enhancement Rider. The decision to add this rider to your policy must be made at issuance of the policy and, once made, is irrevocable. The benefit of this rider is that the cash surrender value of your policy is enhanced during the period for which surrender charges are applicable. Under the Cash Value Enhancement Rider, the enhancement is provided by reducing the surrender charge that would otherwise have applied upon policy surrender or lapse.
Under this rider, the enhancement in cash surrender value is equal to the surrender charge multiplied by the applicable Cash Value Enhancement Waiver Percentage. The applicable Cash Value Enhancement Waiver Percentages under this rider during the Surrender Charge Period are set forth below:
Policy Year   Cash Value Enhancement
Waiver Percentage
1
   90%
2
   80%
3
   60%
4
   40%
5
   20%
6+
   0%
•  Overloan Protection Rider - This rider will prevent your policy from lapsing on any date if policy debt exceeds the death benefit. The benefit is subject to a number of eligibility requirements relating to, among other things, the number of years the policy has been in force, the attained age of the life insured, the death benefit option elected and the tax status of the policy.
When the Overloan Protection Benefit in this rider is invoked, all values in the variable investment accounts and the indexed accounts (upon segment maturity) are transferred to the fixed account and will continue to grow at the current fixed account interest rate. Transfer fees do not apply to these transfers. Thereafter, policy changes and transactions are limited as set forth in the rider; for example, death benefit increases or decreases, additional premium payments, policy loans, withdrawals, surrender and transfers are no longer allowed. Any outstanding policy debt will remain. Interest will continue to be charged at the policy's specified loan interest rate, and the policy's loan account will continue to be credited with the policy's loan interest credited rate. Any applicable No-Lapse Guarantee under the policy no longer applies, and any supplementary benefit rider requiring a monthly deduction will automatically be terminated.
When the Overloan Protection Rider causes the policy to be converted into a fixed policy, there is risk that the Internal Revenue Service could assert that the policy has been effectively terminated and that the outstanding loan balance should be treated as a distribution. Depending on the circumstances, all or part of such deemed distribution may be taxable as income. You should consult a tax adviser as to the risks associated with the Overloan Protection Rider.
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•  Accelerated Benefit Rider - This rider provides for acceleration of payment of a portion of the death benefit should the insured person become terminally ill and have a life expectancy of one year or less. You must meet the following conditions before we pay the benefit.
•  You must provide written evidence satisfactory to us that the life insured is terminally ill and has a life expectancy of one year or less.
•  We must have a signed consent of any irrevocable beneficiary and any assignee.
•  You must claim the benefit voluntarily. We will not pay the benefit if you are claiming it to satisfy creditors or for government benefits.
If you satisfy the above conditions, we will pay you 50% of the eligible death benefit, up to a maximum of $1,000,000. We will not make a payment if it would be less than $10,000. Payment of the benefit will reduce your death benefit and any cash value or loan value under your policy. You should consult your tax adviser and social service agencies before you decide to receive the benefit under this rider. This rider is only available with policies that are individually owned.
•  Healthy Engagement Core Rider - Our Healthy Engagement Core Rider provides the insured person with the opportunity to participate in our Healthy Engagement Core program (the “Program”). This Program is designed to help improve the longevity of the insured person by educating and motivating the insured person to develop and maintain a healthy lifestyle.
By participating in this Program, the insured person may receive discounts on certain goods and services, educational resources, tools, or other items that are designed to encourage learning and participation in heathy activities (the “Program Rewards”). In no event will John Hancock USA use any medical or other information about the insured person, after the issue date, under the Program to change a Risk Classification or as the sole basis to deny a request for reinstatement.
John Hancock USA reserves the right to amend aspects of the Program from time to time, including the Program Rewards. The Program may be administered by us or through an affiliated or unaffiliated company designated by us. John Hancock USA may designate or replace any such company at any time.
Participation in the Program is voluntary and, while there are no policy level fees associated with this rider, there may be costs associated with participating in the Program that will not be reimbursed by us. Examples of such costs include, but are not limited to, health coverage co-pays, health club fees, athletic event registration fees, health equipment, health monitoring devices, athletic attire, and online access fees. Participation in the Program does not provide you with the opportunity to add credits to your policy nor will it affect your policy values.
In order to participate in this Program, the insured person must have attained Age 20. An insured person may not participate in this Program if the Healthy Engagement Rider under the policy has been elected. An insured person may elect to discontinue participation in the Program at any time by written notice to us. If your policy terminates for any reason, the Program will also terminate. An insured person may obtain current information about the Program by visiting http://www.JohnHancockVitality.com/ or by calling 1(800)-387-2747.
Variations in policy terms
Insurance laws and regulations apply to us in every state in which our policies are sold. As a result, terms and conditions of your insurance coverage may vary depending on where you purchase a policy. We disclose all material variations in this prospectus.
We may vary the charges and other terms of our policies where special circumstances result in sales or administrative expenses, mortality risks or other risks that are different from those normally associated with the policies. These include the type of variations discussed under “Special purchase programs for eligible classes.” No variation in any charge will exceed any maximum stated in this prospectus with respect to that charge.
Any variation discussed above will be made only in accordance with uniform rules that we adopt and that we apply fairly to our customers.
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Procedures for issuance of a policy
Generally, the policy is available with a minimum Base Face Amount at issue of $50,000. At the time of issue, the insured person must have an attained age of no more than 90. The insured person must meet certain health and other insurance risk criteria called “underwriting standards.”
Policies issued in Montana or in connection with certain employee plans will not directly reflect the sex of the insured person in either the premium rates or the charges or values under the policy.
Commencement of insurance coverage
After you apply for a policy, it can sometimes take up to several weeks for us to gather and evaluate all the information we need to decide whether to issue a policy to you and, if so, what the insured person's risk classification should be. After we approve an application for a policy and assign an appropriate insurance risk classification, we will prepare the policy for delivery. We will not pay a death benefit under a policy unless the policy is in effect when the insured person dies (except for the circumstances described under “Temporary coverage prior to policy delivery” below).
The policy will take effect only if all of the following conditions are satisfied:
•  The policy is delivered to and received by the applicant.
•  The Minimum Initial Premium is received by us.
•  The insured person is living and there has been no deterioration in the insurability of the insured person since the date of the application.
The date all of the above conditions are satisfied is referred to in this prospectus as the “Contract Completion Date.” If all of the above conditions are satisfied, the policy will take effect on the date shown in the policy as the “Policy Date.” That is the date on which we begin to take monthly deductions. Policy months, policy years and policy anniversaries are all measured from the Policy Date.
Backdating
Under limited circumstances, we may backdate a policy, upon request, by assigning a Policy Date earlier than the date the application is signed. However, in no event will a policy be backdated earlier than the earliest date allowed by state law, which is generally three months to one year prior to the date of application for the policy. The most common reasons for backdating are to preserve a younger age at issue for the insured person or to retain a common monthly deduction date in certain corporate-owned life insurance cases involving multiple policies issued over time. If used to preserve age, backdating will result in lower insurance charges. However, monthly deductions will begin earlier than would otherwise be the case. Monthly deductions for the period the Policy Date is backdated will actually be deducted from policy value on the Contract Completion Date.
Temporary coverage prior to policy delivery
If a specified amount of premium is paid with the application for a policy and other conditions are met, we will provide temporary term life insurance coverage on the insured person for a period prior to the time coverage under the policy takes effect. Such temporary term coverage will be subject to the terms and conditions described in the Temporary Life Insurance Agreement and Receipt attached to the application for the policy, including conditions to coverage and limits on amount and duration of coverage.
Monthly deduction dates
Each charge that we deduct monthly is assessed against your policy value at the close of business on the Policy Date and at the close of the first day in each subsequent policy month.
Changes that we can make as to your policy
We reserve the right to make any changes in the policy necessary to ensure the policy is within the definition of life insurance under the Federal tax laws and is in compliance with any changes in Federal or state tax laws.
In our policies, we reserve the right to make certain changes if they would serve the best interests of policy owners or would be appropriate in carrying out the purposes of the policies. These changes include the following:
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•  Changes necessary to comply with or obtain or continue exemptions under the Federal securities laws
•  Adding or removing fixed accounts, indexed accounts or variable investment accounts
•  Combining variable investment accounts
•  Closing the variable investment accounts or indexed accounts to new allocations or transfers
•  Changes in the form of organization of any separate account
Any such changes will be made only to the extent permitted by applicable laws and only in the manner permitted by such laws. When required by law, we will obtain your approval of the changes and the approval of any appropriate regulatory authority.
The owner of the policy
Who owns the policy? That's up to the person who applies for the policy. The owner of the policy is the person who can exercise most of the rights under the policy, such as the right to choose the accounts in which to invest or the right to surrender the policy. In many cases, the person buying the policy is also the person who will be the owner. However, the application for a policy can name another person or entity (such as a trust) as owner. Whenever we've used the term “you” in this prospectus, we've assumed that the reader is the person who has whatever right or privilege is being discussed. There may be tax consequences if the owner and the insured person are different, so you should discuss this issue with your tax adviser.
While the insured person is alive, you will have a number of options under the policy. These options include those listed below:
•  Determine when and how much you invest in the variable investment accounts, indexed accounts and any fixed account
•  Borrow or withdraw amounts you have in the variable investment account, the indexed accounts and any fixed account
•  Change the beneficiary who will receive the death benefit
•  Change the amount of insurance
•  Turn in (i.e., “surrender”) the policy for the full amount of its net cash surrender value
•  Choose the form in which we will pay out the death benefit or other proceeds
It is possible to name so-called “joint owners” of the policy. If more than one person owns a policy, all owners must join in most requests to exercise rights under the policy.
Your beneficiary
You name your beneficiary when you apply for the policy. The beneficiary is entitled to the proceeds we pay following the insured person's death. Until the death of the insured person you can change your beneficiary by written request. Such a change requires the consent of any named irrevocable beneficiary. A new beneficiary designation will not affect any payments we make before we receive it. If no beneficiary is living when the insured person dies, we will pay the insurance proceeds to the owners or the owner's estate.
Policy cancellation right
You have the right to cancel your policy within ten days after you receive it (the period may be longer in some states). This is often referred to as the “free look” period. During this period, your premiums will be allocated as described under “Processing premium payments” in this prospectus. To cancel your policy, simply deliver or mail the policy to:
•  John Hancock USA at either of the addresses shown on the back cover of this prospectus, or
•  the John Hancock USA representative who delivered the policy to you.
The date of cancellation will be the date of such mailing or delivery. In most states, you will receive a refund of any premiums you’ve paid. In some states, the refund will be your policy value on the date of cancellation.
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Delay to challenge coverage
We may challenge the validity of your insurance policy based on any material misstatements made to us in the application for the policy. We cannot make such a challenge, however, beyond certain time limits that are specified by the laws of the state in which your policy was issued. The longest limit is two years, except in cases of fraud.
Reports that you will receive
At least annually, we will send you a statement setting forth at least the following information as of the end of the most recent reporting period: the amount of the death benefit, the portion of the policy value in the fixed account, the indexed accounts and in each variable investment account, premiums received and charges deducted from premiums since the last report, any outstanding policy loan (and interest charged for the preceding policy year), and any further information required by law. Moreover, you also will receive confirmations of premium payments, transfers among accounts, policy loans, partial withdrawals and certain other policy transactions.
Semi-annually we will send you a report containing the financial statements of the portfolios, including a list of securities held in each portfolio.
Assigning your policy
You may assign your rights in the policy to someone else as collateral for a loan or for some other reason. Assignments do not require the consent of any revocable beneficiary. A copy of the assignment must be forwarded to us. We are not responsible for any payment we make or any action we take before we receive a copy of the assignment at our Service Office. Nor are we responsible for the validity of the assignment or its efficacy in meeting your objectives. An absolute assignment is a change of ownership. All collateral assignees of record must usually consent to any surrender, withdrawal or loan from the policy.
When we pay policy proceeds
General
We will ordinarily pay any death benefit, withdrawal, surrender value or loan within seven days after we receive the last required form or request (and, with respect to the death benefit, any other documentation that may be required). You may choose to receive proceeds from the policy as a single sum. If we do not have information about the desired manner of payment within seven days after the date we receive documentation of the insured person's death, we will pay the proceeds as a single sum. As permitted by state law and our current administrative procedures, death claim proceeds may be placed into an interest-bearing John Hancock retained asset account in the beneficiary's name. The interest earned in a John Hancock retained asset account is normally subject to income tax. You should consult with your tax advisor if you have any questions regarding taxation of the interest earned. We will provide the beneficiary with a checkbook, so checks may be written for all or a part of the proceeds. The retained asset account is part of our general account and is subject to the claims of our creditors. It is not a bank account and it is not insured by the FDIC. We may receive a benefit from managing proceeds held in a retained asset account. Alternatively, you can elect to have proceeds of $1,000 or more applied to any of the other payment options we may offer at the time. You cannot choose an option if the monthly payments under the option would be less than $50. We will issue a supplementary agreement when the proceeds are applied to any alternative payment option. That agreement will spell out terms of the option in full. Please contact our Service Office for more information.
Delay for check clearance
We reserve the right to defer payment of that portion of your policy value that is attributable to a premium payment made by check for a reasonable period of time (not to exceed fifteen days) to allow the check to clear the banking system. We will not delay payment longer than necessary for us to verify a check has cleared the banking system.
Delay of separate account proceeds
We reserve the right to defer payment of any death benefit, loan or other distribution that is derived from a variable investment account if (1) the New York Stock Exchange is closed (other than customary weekend and holiday closings) or trading on the New York Stock Exchange is restricted; (2) an emergency exists, as determined by the SEC, as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to fairly determine the policy value; or (3) the SEC by order permits the delay for the protection of owners. Transfers and allocations of policy value among
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the variable investment accounts may also be postponed under these circumstances. If we need to defer calculation of separate account values for any of the foregoing reasons, all delayed transactions will be processed at the next values that we do compute.
Delay of general account surrender proceeds
State laws allow us to defer payment of any portion of the net cash surrender value derived from the fixed account and indexed accounts for up to six months. These laws were enacted many years ago to help insurance companies in the event of a liquidity crisis.
How you communicate with us
General rules
You should mail or express all checks and money orders for premium payments and loan repayments to the John Hancock USA Service Office at the appropriate address shown on the back cover.
Under our current rules, certain requests must be made in writing and be signed and dated by you. Those requests include the following.
•  loans
•  surrenders or withdrawals
•  change of death benefit option
•  increase or decrease in Face Amount
•  change of beneficiary
•  election of payment option for policy proceeds
•  tax withholding elections
•  election of telephone/internet transaction privilege
The following requests may be made either in writing (signed and dated by you) or by telephone or fax or through the Company's secured website, if a special form is completed (see “Telephone, facsimile and internet transactions” below).
•  transfers of policy value among the variable investment accounts, the indexed accounts and any fixed account
•  change of allocation among the variable investment accounts, the indexed accounts and any fixed account for new premium payments
You should mail or express all written requests to our Service Office at the appropriate address shown on the back cover. You should also send notice of the insured person's death and related documentation to our Service Office. We do not consider that we’ve “received” any communication until such time as it has arrived at the proper place and in the proper and complete form.
We have special forms that should be used for a number of the requests mentioned above. You can obtain these forms from our Service Office or your John Hancock USA representative. Each communication to us must include your name, your policy number and the name of the insured person. We cannot process any request that doesn’t include this required information. Any communication that arrives after the close of our business day, or on a day that is not a business day, will be considered “received” by us on the next following business day. Our business day currently closes at 4:00 p.m. Eastern time, but special circumstances (such as suspension of trading on a major exchange) may dictate an earlier closing time.
Telephone, facsimile and internet transactions
If you complete a special authorization form, you can request transfers among the variable investment accounts, the indexed accounts and any fixed account and changes of allocation among the variable investment accounts and any fixed account simply by telephoning us at 1-800-827-4546 or by faxing us at 1-617-572-1571 or through the Company's secured website. Any fax or internet request should include your name, daytime telephone number, policy number and, in the case of transfers and changes of allocation, the names of the variable investment accounts, the indexed accounts and any fixed account involved. We will honor telephone and internet instructions from anyone who provides the correct identifying information, so there is a risk of loss to you if this service is used by an unauthorized person. However, you will receive
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written confirmation of all telephone/internet transactions. There is also a risk that you will be unable to place your request due to equipment malfunction or heavy phone line or internet usage. If this occurs, you should submit your request in writing.
If you authorize telephone or internet transactions, you will be liable for any loss, expense or cost arising out of any unauthorized or fraudulent telephone or internet instructions which we reasonably believe to be genuine, unless such loss, expense or cost is the result of our mistake or negligence. We employ procedures which provide safeguards against the execution of unauthorized transactions which are reasonably designed to confirm that instructions received by telephone or internet are genuine. These procedures include requiring personal identification, the use of a unique password for internet authorization, recording of telephone calls, and providing written confirmation to the owner. If we do not employ reasonable procedures to confirm that instructions communicated by telephone or internet are genuine, we may be liable for any loss due to unauthorized or fraudulent instructions.
As stated earlier in this prospectus, the policies are not designed for professional market timing organizations or other persons or entities that use programmed, large or frequent transfers among the variable investment accounts. To discourage disruptive trading, we have imposed certain transfer restrictions (see “Transfers of existing policy value”). In addition, we also reserve the right to change our telephone, facsimile and internet transaction privileges outlined in this section at any time, and to suspend or terminate any or all of those privileges with respect to any owners who we feel are abusing the privileges to the detriment of other owners.
Distribution of policies
John Hancock Distributors LLC (“JH Distributors”), a Delaware limited liability company affiliated with us, is the principal distributor and underwriter of the securities offered through this prospectus and of other annuity and life insurance products we and our affiliates offer. JH Distributors also acts as the principal underwriter of the Trust, whose securities are used to fund certain variable investment accounts under the policies and under other annuity and life insurance products we offer.
JH Distributors' principal address 200 Berkeley Street, Boston, Massachusetts 02116. JH Distributors is a broker-dealer registered under the Securities Exchange Act of 1934 (the “1934 Act”) and a member of the Financial Industry Regulatory Authority (“FINRA”).
We offer the policies for sale through individuals who are licensed as insurance agents and who are registered representatives of broker-dealers that have entered into selling agreements with JH Distributors. In addition, we, either directly or through JH Distributors, have entered into agreements with other financial intermediaries that provide marketing, sales support and certain administrative services to help promote the policies (“financial intermediaries”). In a limited number of cases, we have entered into loans, leases or other financial agreements with these broker-dealers or financial intermediaries or their affiliates.
Compensation
The broker-dealers and other financial intermediaries that distribute or support the marketing of our policies may be compensated by means of various compensation and revenue sharing arrangements. A general description of these arrangements is set out below under “Standard compensation” and “Additional compensation and revenue sharing.” These arrangements may differ between firms, and not all broker-dealers or financial intermediaries will receive the same compensation and revenue sharing benefits for distributing our policies. Also, a broker-dealer may receive more or less compensation or other benefits for the promotion and sale of our policy than it would expect to receive from another issuer.
Under their own arrangements, broker-dealers determine how much of any amounts received from us is to be paid to their registered representatives.
Policy owners do not pay any compensation or revenue sharing benefits directly. These payments are made from JH Distributors’ and our own revenues, profits or retained earnings, which may be derived from a number of sources, such as fees received from an underlying fund’s distribution plan (“12b-1 fees”), the fees and charges imposed under the policy and other sources.
You should contact your registered representative for more information on compensation arrangements in connection with your purchase of a policy. We provide additional information on special compensation or reimbursement arrangements involving broker-dealers and other financial intermediaries in the SAI, which is available upon request.
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Standard compensation. JH Distributors pays compensation to broker-dealers for the promotion and sale of the policies, and for providing ongoing service in relation to policies that have already been purchased. We may also pay a limited number of broker-dealers commissions or overrides to “wholesale” the policies; that is, to provide marketing support and training services to the broker-dealer firms that do the actual selling.
The compensation JH Distributors pays to broker-dealers may vary depending on the selling agreement. The compensation paid is not expected to exceed 138% of target premium paid in the first policy year, and 8% of target premium paid in years 2-10. Compensation paid on any premium in excess of target will not exceed 10% in any year. This compensation schedule is exclusive of additional compensation and revenue sharing and inclusive of overrides and expense allowances paid to broker-dealers for sale of the policies (not including riders).
Additional compensation and revenue sharing. To the extent permitted by SEC and FINRA rules and other applicable laws and regulations, we may enter into special compensation or reimbursement arrangements (“revenue sharing”), either directly or through JH Distributors, with selected broker-dealers and other financial intermediaries. In consideration of these arrangements, a firm may feature our policy in its sales system, give us preferential access to sales staff, or allow JH Distributors or its affiliates to participate in conferences, seminars or other programs attended by the firm’s sales force. We hope to benefit from these revenue sharing and other arrangements through increased sales of our policies.
Selling broker-dealers and other financial intermediaries may receive, directly or indirectly, additional payments in the form of cash, other compensation or reimbursement. These additional compensation or reimbursement arrangements may include, for example, payments in connection with the firm's “due diligence” examination of the policies, payments for providing conferences or seminars, sales or training programs for invited registered representatives and other employees, payment for travel expenses, including lodging, incurred by registered representatives and other employees for such seminars or training programs, seminars for the public or client seminars, advertising and sales campaigns regarding the policies, payments to assist a firm in connection with its systems, operations and marketing expenses and/or other events or activities sponsored by the firms. We may contribute to, as well as sponsor, various educational programs, sales promotions, and/or other contests in which participating firms and their sales persons may receive gifts and prizes such as merchandise, cash or other rewards as may be permitted under FINRA rules and other applicable laws and regulations.
Tax considerations
This description of Federal income tax consequences is only a brief summary and is neither exhaustive nor authoritative. It was written to support the promotion of our products. It does not constitute legal or tax advice, and it is not intended to be used and cannot be used to avoid any penalties that may be imposed on you. Tax consequences will vary based on your own particular circumstances, and for further information you should consult a qualified tax adviser. Federal, state and local tax laws, regulations and interpretations can change from time to time. As a result, the tax consequences to you and the beneficiary may be altered, in some cases retroactively. The policy may be used in various arrangements, including non-qualified deferred compensation or salary continuation plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances of each individual arrangement. Therefore, if the value of using the policy in any such arrangement depends in part on the tax consequences, a qualified tax adviser should be consulted for advice.
General
We are taxed as a life insurance company. Under current tax law rules, we include the investment income (exclusive of capital gains) of the Separate Account in our taxable income and take deductions for investment income credited to our policy holder reserves. We are also required to capitalize and amortize certain costs instead of deducting those costs when they are incurred. We do not currently charge the Separate Account for any resulting income tax costs, other than a charge we may impose against the Separate Account to compensate us for the cost of a delay in the deductibility of deferred acquisition costs (the “DAC tax” adjustment) pursuant to section 848 of the Internal Revenue Code. We also claim certain tax credits or deductions relating to foreign taxes paid and dividends received by the series funds. These benefits can be material. We do not pass these benefits through to the Separate Account, principally because: (i) the deductions and credits are allowed to us and not the policy owners under applicable tax law; and (ii) the deductions and credits do not represent investment return on the Separate Account assets that is passed through to policy owners.
The policies permit us to deduct a charge for any taxes we incur that are attributable to the operation or existence of the policies or the Separate Account. Currently, we do not anticipate making any specific charge for such taxes other than any
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DAC tax charge and premium taxes where applicable. If the level of the current taxes increases, however, or is expected to increase in the future, we reserve the right to make a charge in the future.
Death benefit proceeds and other policy distributions
Generally, death benefits paid under policies such as yours are not subject to income tax unless policy ownership has been transferred in exchange for payment. Earnings on your policy value are ordinarily not subject to income tax as long as we don’t pay them out to you. If we do pay out any amount of your policy value upon surrender or partial withdrawal, all or part of that distribution would generally be treated as a return of the premiums you’ve paid and not subjected to income tax. Any portion not treated as a return of your premiums would be includible in your income.
Please note that certain distributions associated with a reduction in death benefit or other policy benefits within the first fifteen years after issuance of the policy are ordinarily taxable in whole or in part. Amounts you borrow are generally not taxable to you.
However, some of the tax rules change if your policy becomes a modified endowment contract. This can happen if you’ve paid premiums in excess of limits prescribed by the tax laws. In that case, additional taxes and penalties may be payable for policy distributions of any kind, including loans. (See “7-pay premium limit and modified endowment contract status” below.)
We expect the policy to receive the same Federal income and estate tax treatment as fixed benefit life insurance policies. Section 7702 of the Internal Revenue Code defines a life insurance contract for Federal tax purposes. For a policy to be treated as a life insurance contract, it must satisfy either the cash value accumulation test or the guideline premium test. We will monitor compliance with these standards. If we determine that a policy does not satisfy section 7702, we may take whatever steps are appropriate and reasonable to bring it into compliance with section 7702.
If the policy complies with section 7702, the death benefit proceeds under the policy ordinarily should be excludable from the beneficiary’s gross income under section 101 of the Internal Revenue Code. (As noted above, a transfer of the policy for valuable consideration may limit the exclusion of death benefits from the beneficiary's income.) In addition, if you have elected a Long-Term Care Rider, or the Long-Term Care Rider 2018, the rider's benefits generally will be excludable from gross income under the Internal Revenue Code. The tax-free nature of these accelerated benefits is contingent on the rider meeting specific requirements under section 101 and/or section 7702B of the Internal Revenue Code. The riders are intended to meet these standards.
If you have elected a Long-Term Care Rider or the Long-Term Care Rider 2018, we caution you that there is a significant risk that ownership by anyone other than the person insured by the policy will cause adverse tax consequences. If the owner of the policy is not the insured person, benefit payments may be included in the owner's income, and the death benefit may be part of the insured person's estate for purposes of the Federal estate tax. A policy with a Long-Term Care Rider or the Long Term Care Rider 2018 should not be purchased by or transferred to a person other than the insured person unless you have carefully reviewed the tax implications with your tax adviser.
Increases in policy value as a result of interest or investment experience will not be subject to Federal income tax unless and until values are received through actual or deemed distributions. In general, unless the policy is a modified endowment contract, the owner will be taxed only on the amount of distributions that exceed the premiums paid under the policy. An exception to this general rule occurs in the case of a decrease in the policy's death benefit or any other change that reduces benefits under the policy in the first fifteen years after the policy is issued and that results in a cash distribution to the policy owner. Changes that reduce benefits include partial withdrawals, death benefit option changes, and distributions required to keep the policy in compliance with section 7702. For purposes of this rule any distribution within the two years immediately before a reduction in benefits will also be treated as if it were a result of the reduction. A cash distribution that reduces policy benefits will be taxed in whole or in part (to the extent of any gain in the policy) under rules prescribed in section 7702. The taxable amount is subject to limits prescribed in section 7702(f)(7). Any taxable distribution will be ordinary income to the owner (rather than capital gain).
Distributions for tax purposes include amounts received upon surrender or partial withdrawals. You may also be deemed to have received a distribution for tax purposes if you assign all or part of your policy rights or change your policy’s ownership. If you have elected a Long-Term Care Rider or the Long-Term Care Rider 2018, as described in “Optional supplementary benefit riders you can add,” deductions from policy value to pay the rider charges will reduce your investment in the contract but will not be included in income even if you have recovered all of your investment in the contract.
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If you have elected the Critical Illness Benefit Rider, as described in “Optional supplementary benefit riders you can add,” we will treat the monthly charges for the Critical Illness Rider as distributions from your life insurance policy for federal income tax purposes. Therefore, such charges may be includable in your taxable income if your policy is a modified endowment contract or if your investment in the contract has been reduced to zero. We anticipate that benefits paid under the Critical Illness Rider will generally be excludible from gross income under Internal Revenue Code section 104(a)(3). However, the benefits may not qualify for this exclusion with certain third-party ownership arrangements. Nevertheless, you should consult your tax adviser as to the income tax consequences to you.
It is possible that, despite our monitoring, a policy might fail to qualify as a life insurance contract under the Internal Revenue Code. This could happen, for example, if we inadvertently failed to return to you any premium payments that were in excess of amounts permitted under section 7702, or if any of the funds failed to meet certain investment diversification or other requirements of the Internal Revenue Code. If this were to occur, you would be subject to income tax on the income credited to the policy from the date of issue to the date of the disqualification and for subsequent periods.
Tax consequences of ownership or receipt of policy proceeds under Federal, state and local estate, inheritance, gift and other tax laws will depend on the circumstances of each owner or beneficiary. If the person insured by the policy is also its owner, either directly or indirectly through an entity such as a revocable trust, the death benefit will be includible in his or her estate for purposes of the Federal estate tax. If the owner is not the person insured, the value of the policy will be includible in the owner's estate upon his or her death. Even if ownership has been transferred, the death proceeds or the policy value may be includible in the former owner's estate if the transfer occurred less than three years before the former owner's death or if the former owner retained certain kinds of control over the policy. You should consult your tax adviser regarding these possible tax consequences.
Because there may be unfavorable tax consequences (including recognition of taxable income and the loss of income tax-free treatment for any death benefit payable to the beneficiary), you should consult a qualified tax adviser prior to changing the policy’s ownership or making any assignment of ownership interests.
If you have elected the Healthy Engagement Rider, we will treat the monthly charges for the Rider as distributions from your life insurance policy for federal income tax purposes. Therefore, such charges may be includable in your taxable income if your policy is a modified endowment contract or if your investment in the contract has been reduced to zero.
We do not expect that we will be required to report any free or discounted services or products that are available to the insured person under the Healthy Engagement Rider or the Healthy Engagement Core Rider to the Internal Revenue Service on Form 1099. Nevertheless, you should consult your tax adviser as to the income tax consequences to you.
Policy loans
We expect that, except as noted below (see “7-pay premium limit and modified endowment contract status”), loans received under the policy will be treated as indebtedness of an owner and that no part of any loan will constitute income to the owner. However, if the policy terminates for any reason other than the payment of the death benefit, an amount equal to any outstanding loan that was not previously considered income will be treated as if it had been distributed to the owner upon such termination. This could result in a considerable tax bill. Under certain circumstances involving large amounts of outstanding loans, you might find yourself having to choose between high premiums required to keep your policy from lapsing and a significant tax burden if you allow the lapse to occur.
Diversification rules and ownership of the Separate Account
Your policy will not qualify for the tax benefits of a life insurance contract unless the Separate Account follows certain rules requiring diversification of investments underlying the policy. In addition, the rules require that the policy owner not have “investor control” over the underlying assets.
In certain circumstances, the owner of a variable life insurance policy may be considered the owner, for Federal income tax purposes, of the assets of the Separate Account used to support the policy. In those circumstances, income and gains from the Separate Account assets would be includible in the policy owner's gross income. The Internal Revenue Service (“IRS”) has stated in published rulings that a variable policy owner will be considered the owner of Separate Account assets if the policy owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. A Treasury Decision issued in 1986 (T.D. 8101) stated that guidance would be issued in the form of regulations or rulings on “the extent to which policyholders may direct their investments to particular sub-accounts of a Separate Account without being treated as owners of the underlying assets.” As of the date of this prospectus, no comprehensive guidance on
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this point has been issued. In Rev. Rul. 2003-91, however, the IRS ruled that a contract holder would not be treated as the owner of assets underlying a variable life insurance or annuity contract despite the owner’s ability to allocate funds among as many as twenty subaccounts.
The ownership rights under your policy are similar to, but different in certain respects from, those described in IRS rulings in which it was determined that policyholders were not owners of Separate Account assets. Since you have greater flexibility in allocating premiums and policy values than was the case in those rulings, it is possible that you would be treated as the owner of your policy’s proportionate share of the assets of the Separate Account.
We do not know what future Treasury Department regulations or other guidance may require. We cannot guarantee that the funds will be able to operate as currently described in the series funds' prospectuses, or that a series fund will not have to change any fund's investment objectives or policies. We have reserved the right to modify your policy if we believe doing so will prevent you from being considered the owner of your policy's proportionate share of the assets of the Separate Account, but we are under no obligation to do so.
7-pay premium limit and modified endowment contract status
At the time of policy issuance, we will determine whether the Planned Premium schedule will exceed the 7-pay limit discussed below. If so, our standard procedures prohibit issuance of the policy unless you sign a form acknowledging that fact.
The 7-pay limit at any time during the first seven contract years is the total of net level premiums that would have been payable at or before that time under a comparable fixed policy that would be fully “paid-up” after the payment of seven equal annual premiums. “Paid-up” means that no further premiums would be required to continue the coverage in force until maturity, based on certain prescribed assumptions. If the total premiums paid at any time during the first seven policy years exceed the 7-pay limit, the policy will be treated as a modified endowment contract, which can have adverse tax consequences.
Policies classified as modified endowment contracts are subject to the following tax rules:
•  First, all withdrawals from such a policy are treated as ordinary income subject to tax up to the amount equal to the excess (if any) of the policy value immediately before the withdrawal over the investment in the policy at such time. If you own any other modified endowment contracts issued to you in the same calendar year by the same insurance company or its affiliates, their values will be combined with the value of the policy from which you take the withdrawal for purposes of determining how much of the withdrawal is taxable as ordinary income.
•  Second, loans taken from or secured by such a policy and assignments or pledges of any part of its value are treated as partial withdrawals from the policy and taxed accordingly. Past-due loan interest that is added to the loan amount is treated as an additional loan.
•  Third, a 10% additional penalty tax is imposed on the portion of any distribution (including distributions on surrender) from, or loan taken from or secured by, such a policy that is included in income except where the distribution or loan:
•  is made on or after the date on which the policy owner attains age 59½;
•  is attributable to the policy owner becoming disabled; or
•  is part of a series of substantially equal periodic payments for the life (or life expectancy) of the policy owner or the joint lives (or joint life expectancies) of the policy owner and the policy owner’s beneficiary.
These exceptions to the 10% additional tax do not apply in situations where the policy is not owned by an individual.
Furthermore, any time there is a “material change” in a policy, the policy will begin a new 7-pay testing period as if it were a newly-issued policy. The material change rules for determining whether a policy is a modified endowment contract are complex. In general, however, the determination of whether a policy will be a modified endowment contract after a material change depends upon the relationship among the death benefit of the policy at the time of such change, the policy value at the time of the change, and the additional premiums paid into the policy during the seven years starting with the date on which the material change occurs.
Moreover, under a policy insuring a single life, if there is a reduction in benefits (such as a reduction in the death benefit or the reduction or cancellation of certain rider benefits) during a 7-pay testing period, the 7-pay limit will generally be recalculated based on the reduced benefits and the policy will be re-tested from the beginning of the 7-pay testing period using the lower limit. If the premiums paid to date at any point during the 7-pay testing period are greater than the
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recalculated 7-pay limit, the policy will become a modified endowment contract. If your policy is a survivorship policy, a reduction in benefits under the policy at any time will require re-testing. For such a policy the 7-pay limit will generally be recalculated based on the reduced benefits and the policy will be re-tested, using the lower limit, from the date it was issued. You should consult your tax adviser if you have questions regarding the possible impact of the 7-pay limit on your policy.
If your policy is issued as a result of an exchange subject to section 1035 of the Internal Revenue Code, it may be considered to be a modified endowment contract if the death benefit under the new policy is smaller than the death benefit under the exchanged policy, or if you reduce coverage in your new policy after it is issued. Therefore, if you desire to reduce the face amount as part of a 1035 exchange, a qualified tax adviser should be consulted for advice. A new policy issued in exchange for a modified endowment contract will also be a modified endowment contract regardless of any change in the death benefit.
All modified endowment contracts issued by the same insurer (or its affiliates) to the same owner during any calendar year generally are required to be treated as one contract for the purpose of applying the rules on taxation of withdrawals from modified endowment contracts. You should consult your tax adviser if you have questions regarding the possible impact of the 7-pay limit on your policy.
Corporate and H.R. 10 retirement plans
The policy may be acquired in connection with the funding of retirement plans satisfying the qualification requirements of section 401 of the Internal Revenue Code. If so, the Internal Revenue Code provisions relating to such plans and life insurance benefits thereunder should be carefully scrutinized. We are not responsible for compliance with the terms of any such plan or with the requirements of applicable provisions of the Internal Revenue Code.
Withholding
To the extent that policy distributions to you are taxable, they are generally subject to withholding for your Federal income tax liability. However if you reside in the United States, you can generally choose not to have tax withheld from distributions. Electing to have no withholding will not reduce your tax liability and may expose you to penalties under the rules governing payment of estimated taxes.
Life insurance purchases by residents of Puerto Rico
In Rev. Rul. 2004-75, 2004-31 I.R.B. 109, the Internal Revenue Service ruled that income received by residents of Puerto Rico under a life insurance policy issued by a United States company is U.S.-source income that is subject to United States Federal income tax.
Life insurance purchases by non-resident aliens
If you are not a U.S. citizen, U.S. resident alien or other U.S. person, you will generally be subject to U.S. Federal withholding tax on taxable distributions from life insurance policies at a 30% rate, unless a lower treaty rate applies. In addition, you may be subject to state and/or municipal taxes and taxes imposed by your country of citizenship or residence. You should consult with a qualified tax adviser before purchasing a policy.
Life insurance owned by citizens or residents living abroad
If you are a U.S. citizen or permanent resident living outside the United States, you are still subject to income taxation by the United States. Since many countries tax on the basis of domicile, you may also be subject to tax in the country or territory in which you are living. The tax-deferred accumulation of gain that a life insurance policy provides under United States tax law may not be available under the tax laws of the country in which you are living. If you are living outside the United States or planning to do so, you should consult with a qualified tax adviser before purchasing or retaining ownership of a policy. If your policy is issued as a result of an exchange of a policy owned or issued outside the United States, the country or territory in which you reside may still tax you on the surrender of the policy replaced through the exchange. You should consult with a qualified tax adviser before exchanging your policy issued outside of the United States for one issued within the United States.
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Financial statements reference
The financial statements of John Hancock USA and the Separate Account can be found in the SAI. The financial statements of John Hancock USA should be distinguished from the financial statements of the Separate Account and should be considered only as bearing upon the ability of John Hancock USA to meet its obligations under the policies. Our general account is comprised of securities and other investments, the value of which may decline during periods of adverse market conditions.
Registration statement filed with the SEC
This prospectus omits certain information contained in the Registration Statement which has been filed with the SEC. More details may be obtained from the SEC upon payment of the prescribed fee.
Legal and Regulatory Matters
There are no legal proceedings to which the Depositor, the Separate Account or the principal underwriter is a party or to which the assets of the Separate Account are subject that are likely to have a material adverse effect on the Separate Account or the ability of the principal underwriter to perform its contract with the Separate Account or of the Depositor to meet its obligations under the policy.
Independent registered public accounting firm
The statutory-basis financial statements of John Hancock Life Insurance Company (U.S.A.) at December 31, 2018 and 2017, and for each of the three years in the period ended December 31, 2018, and the financial statements of John Hancock Life Insurance Company (U.S.A.) Separate Account A at December 31, 2018, and for each of the two years in the period ended December 31, 2018, appearing in this Prospectus and Registration Statement have been audited by Ernst &Young LLP, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
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In addition to this prospectus, John Hancock USA has filed with the SEC an SAI that contains additional information about John Hancock USA and the Separate Account, including information on our history, services provided to the Separate Account, and the audited financial statements for John Hancock USA and the Separate Account. The SAI and personalized illustrations of death benefits, policy values and surrender values are available, without charge, upon request. You may obtain the personalized illustrations from your John Hancock USA representative. The SAI may be obtained by contacting the John Hancock USA Service Office. You should also contact the John Hancock USA Service Office to request any other information about your policy or to make any inquiries about its operation.
JOHN HANCOCK USA SERVICE OFFICE
Overnight Express Delivery Mail Delivery
Life Post Issue
John Hancock Insurance Company
30 Dan Road, Suite #55979
Canton, MA 02021 		Life Post Issue
John Hancock Life Insurance Company
PO Box 55979
Boston, MA 02205
Phone: Fax:
1-800-827-4546 1-617-572-1571
Information about the Separate Account (including the SAI) can be reviewed and copied at the SEC’s Public Reference Branch, 100 F Street, NE, Room 1580, Washington, DC, 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-8090. Reports and other information about the Account are available on the SEC’s Internet website at http://www.sec.gov. Copies of such information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549-0102.
1940 Act File No. 811-4834—1933 Act File No. 333-233647

Table of Contents
Statement of Additional Information
dated December 16, 2019
for interests in
John Hancock Life Insurance Company (U.S.A.) Separate Account A
(Name of Registrant)
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
(“John Hancock USA”)
(Name of Depositor)
This is a Statement of Additional Information (“SAI”). It is not the prospectus. The prospectus, dated the same date as this SAI, may be obtained from a John Hancock USA representative or by contacting our Service Office by mail at Life Post Issue, John Hancock Insurance Company, PO Box 55979, Boston, MA 02205, or telephone at 1-800-827-4546.
TABLE OF CONTENTS

 

Description of the Depositor
Under the Federal securities laws, the entity responsible for organization of the registered separate account underlying the variable life insurance policy is known as the “Depositor.” John Hancock USA (“Depositor”) is a stock life insurance company organized under the laws of Maine on August 20, 1955 by a special act of the Maine legislature and redomesticated under the laws of Michigan. The Depositor is a licensed life insurance company in the District of Columbia and all states of the United States except New York. Until 2004, the Depositor was known as The Manufacturers Life Insurance Company (U.S.A.).
The Depositor's ultimate parent is Manulife Financial Corporation (“MFC”), a publicly traded company based in Toronto, Canada. MFC is the holding company of The Manufacturers Life Insurance Company and its subsidiaries, collectively known as Manulife Financial.
Description of the Registrant
Under the Federal securities laws, the registered separate account underlying the variable life insurance policy is known as the “Registrant.” John Hancock Life Insurance Company (U.S.A.) Separate Account A (the “Registrant” or “Separate Account”), is a separate account established by the Depositor under Michigan law. The variable investment accounts shown on page 1 of the prospectus are subaccounts of the Separate Account. The Separate Account meets the definition of “separate account” under the Federal securities laws and is registered as a unit investment trust under the Investment Company Act of 1940 (“1940 Act”). Such registration does not involve supervision by the Securities and Exchange Commission (“SEC”) of the management of the Separate Account or of the Depositor.
New subaccounts may be added and made available to policy owners from time to time. Existing subaccounts may be modified or deleted at any time.
Services
Administration of policies issued by the Depositor and of registered separate accounts organized by the Depositor may be provided by other affiliates. Neither the Depositor nor the separate accounts are assessed any charges for such services.
Custodianship and depository services for the Registrant are provided by State Street Investment Services (“State Street”). State Street’s address is State Street Financial Center, One Lincoln Street, Boston, Massachusetts, 02111.
Independent registered public accounting firm
The statutory-basis financial statements of John Hancock Life Insurance Company (U.S.A.) at December 31, 2018 and 2017, and for each of the three years in the period ended December 31, 2018, and the financial statements of John Hancock Life Insurance Company (U.S.A.) Separate Account A at December 31, 2018, and for each of the two years in the period ended December 31, 2018, appearing in this Prospectus and Registration Statement have been audited by Ernst &Young LLP, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
2

 

Principal Underwriter/Distributor
John Hancock Distributors LLC (“JH Distributors”), a Delaware limited liability company affiliated with the Depositor, is the principal distributor and underwriter of the securities offered through the prospectus. JH Distributors acts as the principal distributor of a number of other life insurance and annuity products we and our affiliates offer or maintain. JH Distributors also acts as the principal underwriter of John Hancock Variable Insurance Trust (the “Trust”), whose securities are used to fund certain variable investment options under the policies and under other life insurance and annuity products we offer or maintain.
JH Distributors' principal address is 200 Berkeley Street, Boston, MA 02116. JH Distributors is a broker-dealer registered under the Securities Act of 1934 (the “1934 Act”) and is a member of the Financial Industry Regulatory Authority (“FINRA”).
We offer the policies for sale, on a continuous basis, through individuals who are licensed as insurance agents and who are registered representatives of broker-dealers that have entered into selling agreements with JH Distributors.
The aggregate dollar amount of underwriting commissions paid to JH Distributors by the Depositor and its affiliates in connection with the sale of variable life products in 2018, 2017, and 2016, was $95,309,756, $94,706,904, and $100,416,732, respectively. JH Distributors did not retain any of these amounts during such periods.
The registered representative through whom your policy is sold will be compensated pursuant to the registered representative’s own arrangement with his or her broker-dealer. Compensation to broker-dealers for the promotion and sale of the policies is not paid directly by policy owners but will be recouped through the fees and charges imposed under the policy.
Additional compensation and revenue sharing arrangements may be offered to certain broker-dealer firms and other financial intermediaries. The terms of such arrangements may differ among firms we select based on various factors. In general, the arrangements involve three types of payments or any combination thereof:
•  Fixed dollar payments: The amount of these payments varies widely. JH Distributors may, for example, make one or more payments in connection with a firm’s conferences, seminars or training programs, seminars for the public, advertising and sales campaigns regarding the policies, to assist a firm in connection with its systems, operations and marketing expenses, or for other activities of a selling firm or wholesaler. JH Distributors may make these payments upon the initiation of a relationship with a firm, and at any time thereafter.
•  Payments based upon sales: These payments are based upon a percentage of the total amount of money received, or anticipated to be received, for sales through a firm of some or all of the insurance products that we and/or our affiliates offer. JH Distributors makes these payments on a periodic basis.
•  Payments based upon “assets under management”: These payments are based upon a percentage of the policy value of some or all of our (and/or our affiliates’) insurance products that were sold through the firm. JH Distributors makes these payments on a periodic basis.
Additional Information About Charges
A policy will not be issued until the underwriting process has been completed to our satisfaction. The underwriting process generally includes the obtaining of information concerning your age, medical history, occupation and other personal information. This information is then used to determine the cost of insurance charge.
3

 

Special purchase programs for eligible classes
The policy may be available for purchase by corporations and other groups or sponsoring organizations. Group or sponsored arrangements may include reduction or elimination of withdrawal charges and deductions for employees, officers, directors, agents and immediate family members of the foregoing. We reserve the right to reduce any of the policy's charges on certain cases where it is expected that the amount or nature of such cases will result in savings of sales, underwriting, administrative, commissions or other costs. Eligibility for these reductions and the amount of reductions will be determined by a number of factors, including the number of lives to be insured, the total premiums expected to be paid, total assets under management for the policyowner, the nature of the relationship among the insured individuals, the purpose for which the policies are being purchased, expected persistency of the individual policies, and any other circumstances which we believe to be relevant to the expected reduction of its expenses. Some of these reductions may be guaranteed and others may be subject to withdrawal or modifications, on a uniform case basis. Reductions in charges will not be unfairly discriminatory to any policyowners. We may modify from time to time, on a uniform basis, both the amounts of reductions and the criteria for qualification.
4

Table of Contents

AUDITED STATUTORY-BASIS FINANCIAL STATEMENTS

John Hancock Life Insurance Company (U.S.A.)

For the Years Ended December 31, 2018, 2017 and 2016

With Report of Independent Auditors

Table of Contents

AUDITED STATUTORY-BASIS FINANCIAL STATEMENTS

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

Years Ended December 31, 2018, 2017 and 2016

Contents

 

Report of Independent Auditors

      F-1  

Statutory-Basis Financial Statements

   

Balance Sheets—Statutory-Basis

      F-3  

Statements of Operations—Statutory-Basis

      F-5  

Statements of Changes in Capital and Surplus—Statutory-Basis

      F-6  

Statements of Cash Flow—Statutory-Basis

      F-7  

Notes to Statutory-Basis Financial Statements

      F-8  

Table of Contents

Report of Independent Auditors

The Board of Directors and Stockholder

John Hancock Life Insurance Company (U.S.A.)

We have audited the accompanying statutory-basis financial statements of John Hancock Life Insurance Company (U.S.A.) (the Company), which comprise the balance sheets as of December 31, 2018 and 2017, and the related statements of operations, changes in capital and surplus and cash flow for each of the three years in the period ended December 31, 2018, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with accounting practices prescribed or permitted by the Michigan Department of Insurance and Financial Services. Management also is responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

As described in Note 2 to the statutory-basis financial statements, the Company prepared these financial statements using accounting practices prescribed or permitted by the Michigan Department of Insurance and Financial Services, which is a basis of accounting other than U.S. generally accepted accounting principles. The effects on the financial statements of the variances between these statutory accounting practices and U.S. generally accepted accounting principles, although not reasonably determinable, are presumed to be material.

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles paragraph, the statutory-basis financial statements referred to above do not present fairly, in conformity with U.S. generally accepted accounting principles, the financial position of the Company at December 31, 2018 and 2017, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2018.

 

F-1

Table of Contents

Opinion on Statutory-Basis of Accounting

In our opinion, the statutory-basis financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, on the basis of accounting described in Note 2.

/s/ Ernst & Young LLP

Boston, Massachusetts

April 3, 2019

 

F-2

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

BALANCE SHEETS—STATUTORY BASIS

 

     December 31,  
     2018      2017  
  

 

 

  
     (in millions)  

Admitted assets

      

Cash and invested assets:

      

Bonds

        $ 44,556          $ 47,970  

Stocks:

      

Preferred stocks

      14        11  

Common stocks

      918        1,354  

Investments in affiliates

      2,913        2,560  

Mortgage loans on real estate

      12,085        11,900  

Real estate:

      

Company occupied

      162        286  

Investment properties

      3,851        5,436  

Cash, cash equivalents and short-term investments

      2,988        4,131  

Policy loans

      2,788        2,726  

Derivatives

      8,511        9,637  

Receivable for securities

      1        16  

Other invested assets

      9,728        9,269  
  

 

 

     

 

 

  

Total cash and invested assets

      88,515        95,296  

Investment income due and accrued

      583        705  

Premiums due

      65        65  

Amounts recoverable from reinsurers

      232        163  

Net deferred tax asset

      -        13  

Funds held by or deposited with reinsured companies

      3,188        3,321  

Other reinsurance receivable

      575        181  

Amounts due from affiliates

      244        477  

Other assets

      2,423        1,435  

Assets held in separate accounts

         124,131           141,167  
  

 

 

     

 

 

  

Total admitted assets

        $ 219,956          $ 242,823  
  

 

 

     

 

 

  

 

The accompanying notes are an integral part of these statutory-basis financial statements.

 

F-3

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

BALANCE SHEETS—STATUTORY BASIS – (CONTINUED)

 

     December 31,  
     2018     2017  
  

 

 

  
     (in millions)  

Liabilities and capital and surplus

     

Liabilities:

     

Policy and contract obligations:

     

Policy reserves

        $ 64,047         $ 69,132  

Policyholders’ and beneficiaries funds

      2,395       2,683  

Consumer notes

      154       197  

Dividends payable to policyholders

      393       408  

Policy benefits in process of payment

      445       450  

Other amount payable on reinsurance

      845       534  

Other policy obligations

      46       46  
  

 

 

    

 

 

  

Total policy and contract obligations

      68,325       73,450  

Payable to parent and affiliates

      1,309       1,645  

Transfers to (from) separate account, net

      (311 )      (365 ) 

Asset valuation reserve

      1,981       2,106  

Reinsurance in unauthorized companies

      1       4  

Funds withheld from unauthorized reinsurers

      336       66  

Interest maintenance reserve

      1,373       2,038  

Current federal income taxes payable

      -       104  

Net deferred tax liability

      77      
 -
  

Derivatives

      3,719       4,129  

Payables for collateral on derivatives

      1,559       1,973  

Payables for securities

      29       177  

Funds held under coinsurance

      7,376       7,239  

Other general account obligations

      1,181       981  

Obligations related to separate accounts

      124,131       141,167  
  

 

 

    

 

 

  

Total liabilities

      211,086       234,714  

Capital and surplus:

     

Preferred stock (par value $1; 50,000,000 shares authorized; 100,000 shares issued and outstanding at December 31, 2018 and 2017)

      -       -  

Common stock (par value $1; 50,000,000 shares authorized; 4,728,940 shares issued and outstanding at December 31, 2018 and 2017, respectively)

      5       5  

Paid-in surplus

      3,219       3,219  

Surplus notes

      585       585  

Unassigned surplus

      5,061       4,300  
  

 

 

    

 

 

  

Total capital and surplus

      8,870       8,109  
  

 

 

    

 

 

  

Total liabilities and capital and surplus

        $    219,956         $    242,823  
  

 

 

    

 

 

  

 

The accompanying notes are an integral part of these statutory-basis financial statements.

 

F-4

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

STATEMENTS OF OPERATIONS—STATUTORY-BASIS

 

     Years Ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Premiums and other revenues:

       

Life, long-term care and annuity premiums, net

        $ 5,816         $ 18,286         $ 13,227  

Consideration for supplementary contracts with life contingencies

      132       176       201  

Net investment income

      4,665       4,426       4,308  

Amortization of interest maintenance reserve

      179       195       191  

Commissions and expense allowance on reinsurance ceded

      468       1,963       629  

Reserve adjustment on reinsurance ceded

      (7,820 )      (12,621 )      (7,297 ) 

Separate account administrative and contract fees

      1,786       1,772       1,697  

Other revenue

      193       347       434  
  

 

 

    

 

 

    

 

 

  

Total premiums and other revenues

      5,419          14,544          13,390  

Benefits paid or provided:

       

Death, surrender and other contract benefits, net

         12,322       12,693       10,220  

Annuity benefits

      1,735       1,788       1,622  

Disability and long-term care benefits

      801       738       664  

Interest and adjustments on policy or deposit-type funds

      (52 )      (318 )      94  

Payments on supplementary contracts with life contingencies

      203       199       191  

Increase (decrease) in life and long-term care reserves

      (5,078 )      1,979       1,784  
  

 

 

    

 

 

    

 

 

  

Total benefits paid or provided

      9,931       17,079       14,575  

Insurance expenses and other deductions:

       

Commissions and expense allowance on reinsurance assumed

      1,078       1,091       1,049  

General expenses

      1,186       1,039       943  

Insurance taxes, licenses and fees

      167       138       171  

Net transfers to (from) separate accounts

      (7,616 )      (8,706 )      (5,581 ) 

Investment income ceded

      1,052       878       1,240  

Other deductions

      (459 )      153       21  
  

 

 

    

 

 

    

 

 

  

Total insurance expenses and other deductions

      (4,592 )      (5,407 )      (2,157 ) 

Income (loss) from operations before dividends to policyholders, federal income taxes and net realized capital gains (losses)

      80       2,872       972  

Dividends to policyholders

      111       124       131  
  

 

 

    

 

 

    

 

 

  

Income (loss) from operations before federal income taxes and net realized capital gains (losses)

      (31 )      2,748       841  

Federal income tax expense (benefit)

      (725 )      446       (121 ) 
  

 

 

    

 

 

    

 

 

  

Income (loss) from operations before net realized capital gains (losses)

      694       2,302       962  

Net realized capital gains (losses)

      340       (403 )      (933 ) 
  

 

 

    

 

 

    

 

 

  

Net income (loss)

        $ 1,034         $ 1,899         $ 29  
  

 

 

    

 

 

    

 

 

  

 

 

The accompanying notes are an integral part of these statutory-basis financial statements.

 

F-5

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS—STATUTORY-BASIS

 

     Preferred
and
Common
Stock		      Paid-in
Surplus		      Surplus
Notes		     Unassigned
Surplus
(Deficit)		     Total
Capital
and
Surplus		  
  

 

 

  
     (in millions)  

Balances at January 1, 2016

        $   5      $   3,196      $   990     $   1,253     $   5,444  

Net income (loss)

              29       29  

Change in net unrealized capital gains (losses)

              569       569  

Change in net deferred income tax

              810       810  

Decrease (increase) in non-admitted assets

              (38 )      (38 ) 

Decrease (increase) in asset valuation reserves

              (262 )      (262 ) 

Change in surplus as a result of reinsurance

              (125 )      (125 ) 

Surplus note redemptions

            (405 )        (405 ) 

Other adjustments, net

            -       132       132  
  

 

 

  

Balances at December 31, 2016

      5        3,196        585       2,368       6,154  

Net income (loss)

              1,899       1,899  

Change in net unrealized capital gains (losses)

              1,394       1,394  

Change in net deferred income tax

              (726 )      (726 ) 

Decrease (increase) in non-admitted assets

              191       191  

Change in liability for reinsurance in unauthorized reinsurance

              (1 )      (1 ) 

Capital contribution from parent

      -        23            23  

Dividend paid to parent

              (900 )      (900 ) 

Change in surplus as a result of reinsurance

              80       80  

Other adjustments, net

            -       (5 )      (5 ) 
  

 

 

  

Balances at December 31, 2017

      5        3,219        585       4,300       8,109  

Net income (loss)

              1,034       1,034  

Change in net unrealized capital gains (losses)

              (220 )      (220 ) 

Change in net deferred income tax

              (17 )      (17 ) 

Decrease (increase) in non-admitted assets

              43       43  

Change in liability for reinsurance in unauthorized reinsurance

              3       3  

Decrease (increase) in asset valuation reserves

              125       125  

Dividend paid to parent

              (600 )      (600 ) 

Change in surplus as a result of reinsurance

              380       380  

Other adjustments, net

            -       13       13  
  

 

 

  

Balances at December 31, 2018

        $    5      $    3,219      $    585     $    5,061     $    8,870  
  

 

 

  

 

 

The accompanying notes are an integral part of these statutory-basis financial statements.

 

F-6

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

STATEMENTS OF CASH FLOW—STATUTORY-BASIS

 

     Years Ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Operations

       

Premiums and other considerations collected, net of reinsurance

        $    13,901     $    18,819     $    13,411  

Net investment income received

      4,828       4,603       4,415  

Separate account fees

      1,786       1,772       1,697  

Commissions and expenses allowance on reinsurance ceded

      468       1,963       629  

Miscellaneous income

      668       374       595  

Benefits and losses paid

      (22,601 )      (28,091 )      (21,060 ) 

Net transfers from (to) separate accounts

      7,670       8,763       5,699  

Commissions and expenses (paid) recovered

      (3,763 )      (3,040 )      (2,873 ) 

Dividends paid to policyholders

      (126 )      (138 )      (137 ) 

Federal and foreign income and capital gain taxes (paid) recovered

      (617 )      (846 )      200  
  

 

 

  

Net cash provided by (used in) operating activities

      2,214       4,179       2,576  

Investment activities

       

Proceeds from sales, maturities, or repayments of investments:

       

Bonds

      22,532       19,287       20,934  

Stocks

      566       317       239  

Mortgage loans on real estate

      880       885       1,283  

Real estate

      2,507       986       1,295  

Other invested assets

      2,066       624       485  

Net gains (losses) on cash, cash equivalents and short term investments

      (4 )      4       (2 ) 
  

 

 

  

Total investment proceeds

      28,547       22,103       24,234  

Cost of investments acquired:

       

Bonds

      25,992       21,195       21,880  

Stocks

      114       459       652  

Mortgage loans on real estate

      1,975       1,179       2,440  

Real estate

      213       415       446  

Other invested assets

      2,530       1,680       1,429  

Derivatives

      12       46       1,420  
  

 

 

  

Total cost of investments acquired

      30,836       24,974       28,267  

Net increase (decrease) in receivable/payable for securities and collateral on derivatives

      (547 )      217       266  

Net (increase) decrease in policy loans

      (62 )      (4 )      932  
  

 

 

  

Net cash provided by (used in) investment activities

      (2,898 )      (2,658 )      (2,835 ) 

Financing and miscellaneous activities

       

Surplus notes

      -       -       (405 ) 

Borrowed funds

      (42 )      (164 )      (64 ) 

Net deposits (withdrawals) on deposit-type contracts

      (288 )      (34 )      93  

Dividend paid to Parent

      (600 )      (900 )      -  

Other cash provided (applied)

      471       (171 )      (14 ) 
  

 

 

  

Net cash provided by (used in) financing and miscellaneous activities

      (459 )      (1,269 )      (390 ) 

Net increase (decrease) in cash, cash equivalents and short-term investments

      (1,143 )      252       (649 ) 

Cash, cash equivalents and short-term investments at beginning of year

      4,131       3,879       4,528  
  

 

 

  

Cash, cash equivalents and short-term investments at end of year

        $ 2,988     $ 4,131     $ 3,879  
  

 

 

  

Non-cash activities during the year:

       

Premium and other operating activity related to reinsurance transactions, net

        $ 7,873     $ 33     $ 650  

Transfer of invested assets related to reinsurance transactions and other affiliate transactions, net

      (7,873 )      16       (650 ) 

Financing and miscellaneous activities related to reinsurance transactions and transfer with affiliates, net

      -       (49 )      -  

 

 

The accompanying notes are an integral part of these statutory-basis financial statements.

 

F-7

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

 

1. Organization and Nature of Operations

John Hancock Life Insurance Company (U.S.A.) (“JHUSA” or the “Company”) is a wholly-owned subsidiary of The Manufacturers Investment Corporation (“MIC”). MIC is a wholly-owned subsidiary of John Hancock Financial Corporation (“JHFC”), which is an indirect, wholly-owned subsidiary of The Manufacturers Life Insurance Company (“MLI”). MLI, in turn, is a wholly-owned subsidiary of Manulife Financial Corporation (“MFC”), a Canadian-based, publicly traded financial services holding company.

The Company is licensed to conduct insurance business in 49 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands, and provides a wide range of financial protection and wealth management products and services to both individual and institutional customers located primarily in the United States. Through its insurance operations, the Company offers a variety of individual life insurance and individual and group long-term care insurance products that are distributed through multiple distribution channels, including insurance agents, brokers, banks, financial planners, and direct marketing. The Company also offers mutual fund products and services which include a variety of retirement products to retirement plans. The Company distributes these products through multiple distribution channels, including insurance agents and affiliated brokers, securities brokerage firms, financial planners, pension plan sponsors, pension plan consultants, and banks. Effective December 2, 2016, the Company discontinued new sales of its individual long-term care product. Effective March 31, 2018, the Company discontinued new sales of its corporate and bank-owned life insurance products.

The Company is also registered as a foreign reinsurer in several jurisdictions outside of the United States as part of its International Group Program that offers pooling services and reinsurance coverage for group employee contracts issued by its network partners to local companies, which are subsidiaries, branches or affiliates of multinational corporations.

Pursuant to a distribution agreement with the Company, John Hancock Distributors LLC (“JHD”), a registered broker-dealer and a wholly-owned subsidiary of the Company, acts as the principal underwriter of variable life contracts and other products issued by the Company.

The Company has two wholly-owned life insurance subsidiaries, John Hancock Life Insurance Company of New York (“JHNY”) and John Hancock Life & Health Insurance Company (“JHLH”) and a wholly-owned captive insurance subsidiary, Manulife (Michigan) Reassurance Company (“MMRC”).

In 2017, following receipt of regulatory approval, JHLH executed a Plan and Agreement of Merger with John Hancock Insurance Company of Vermont (“JHVT”), also a wholly-owned subsidiary of JHUSA. Effective as of October 1, 2017, JHVT merged with and into JHLH. Prior to the JHLH/JHVT merger, JHUSA issued one common share to its parent MIC in exchange for 100% ownership of JHVT and became the common parent of both JHLH and JHVT. As a result of the merger, JHVT ceased to exist and the companies’ property and obligations became the property and obligations of JHLH.

2. Significant Accounting Policies

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known and may impact the amounts reported and disclosed herein.

Basis of Presentation

These financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Michigan Department of Insurance and Financial Services (the “Insurance Department”). The National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual (“NAIC SAP”) has been adopted as a component of practices prescribed or permitted by the State of Michigan. The Michigan Director of the Department of Insurance and Financial Services (the “Director”) has the authority to prescribe or permit other specific practices that deviate from prescribed practices. NAIC SAP practices differ from accounting principles generally accepted in the United States (“GAAP”) as described below.

 

F-8

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

2. Significant Accounting Policies - (continued)

 

Investments: Investments in bonds not backed by other loans are principally stated at amortized cost using the constant yield (interest) method. Bonds can also be stated at the lesser of amortized cost or fair value based on their NAIC designated rating. Non-redeemable preferred stocks, which have characteristics of equity securities, are reported at cost or lower of cost or market value as determined by the Securities Valuation Office of the NAIC (“SVO”) rating, and the related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes. Redeemable preferred stocks, which have characteristics of debt securities and are rated as medium quality or better, are reported at cost or amortized cost. All other redeemable preferred stocks are reported at the lower of cost, amortized cost, or fair value.

For bonds other than loan-backed and structured securities, the Company has a process in place to identify securities that could potentially have an impairment that is other-than-temporary. The Company recognizes other-than-temporary impairment losses on bonds with unrealized losses when the entity does not have the intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in value. Declines in value due to credit difficulties are also considered to be other-than-temporarily impaired when the Company does not have the intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in value. The entire difference between amortized cost and fair value on such bonds with credit difficulties is recognized as an impairment loss in income.

Loan-backed and structured securities (i.e., collateralized mortgage obligations) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discounts or amortization of premiums of such securities using either the retrospective or prospective methods. The retrospective adjustment method is used to value all such securities, except principal-only and interest-only securities and such securities with NAIC designations of 3-6, which are valued using the prospective method. If it is determined that a decline in fair value is other-than-temporary, the cost basis of the security is written down to the present value of estimated future cash flows using the original effective interest rate inherent in the security.

Common stocks are primarily reported at fair value based on quoted market prices and the related net unrealized capital gains (losses) are reported in unassigned surplus, net of any adjustment for federal income taxes. There are no restrictions on common and preferred stocks.

Insurance subsidiaries are reported at their underlying audited statutory equity. Non-insurance subsidiaries, which have significant ongoing operations other than for the benefit of the Company and its affiliates, are reported based on the underlying audited GAAP equity. Non-insurance subsidiaries, which have no significant ongoing operations other than for the benefit of the Company and its affiliates, are reported based on the underlying audited GAAP equity, including the admitted portion of goodwill. Dividends from subsidiaries are included in net investment income. The remaining net change in the subsidiaries’ equity is included in the change in net unrealized capital gains (losses).

Realized capital gains (losses) on sales of securities are recognized using the first in, first out (“FIFO”) method. The cost basis of bonds, common and preferred stocks, and other invested assets is adjusted for impairments in value deemed to be other-than-temporary and such adjustments are reported as a component of net realized capital gains (losses).

Mortgage loans on real estate are reported at unpaid principal balances, less an allowance for impairments. Valuation allowances, if necessary, are established for mortgage loans on real estate based on the difference between the net value of the collateral, determined as the fair value of the collateral less estimated costs to obtain and sell, and the recorded investment in the mortgage loan. The initial valuation allowance and subsequent changes in the allowance for mortgage loans are charged or credited directly to unassigned surplus. A mortgage loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all principal and interest amounts due according to the contractual terms of the mortgage agreement. When management determines foreclosure is probable and the impairment is other-than-temporary, the mortgage loan is written down and a realized loss is recognized.

Real estate occupied by the Company and real estate held for the production of income are reported at depreciated cost, net of related obligations. Real estate that the Company has the intent to sell is reported at the lower of depreciated cost or fair value, net of related obligations. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties. Investment income and operating expenses include rent for the Company’s occupancy of Company owned properties.

 

F-9

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

2. Significant Accounting Policies - (continued)

 

Cash equivalents are short-term highly liquid investments with original maturities of three months or less and are principally stated at amortized cost. Short-term investments include investments with maturities of one year or less and greater than three months at the date of acquisition and are principally stated at amortized cost.

Policy loans are reported at unpaid principal balances.

Derivative instruments that meet the criteria to qualify for hedge accounting are accounted for in a manner consistent with the item hedged (i.e., amortized cost or fair value with the related net unrealized capital gains (losses) reported in unassigned surplus along with any adjustment for federal income taxes). Derivative instruments that are entered into for other than hedging purposes or that do not meet the criteria to qualify for hedge accounting are accounted for at fair value, and the related changes in fair value are recognized as net unrealized capital gains (losses) reported in unassigned surplus, net of any adjustments for federal income taxes. Embedded derivatives are not accounted for separately from the host contract.

Other invested assets consist of ownership interests in partnerships and limited liability companies (“LLCs”) which are carried based on the underlying audited GAAP equity, with the exception of affordable housing tax credit properties, which are carried at amortized cost. The related net unrealized capital gains (losses) are reported in unassigned surplus, net of any adjustments for federal income taxes. The Company records its share of income using the most recent financial information available, which is generally on a three month lag. Depending on the timing of receipt of the audited financial statements of these other invested assets, the investee level financial data may be up to one year in arrears.

Interest Maintenance and Asset Valuation Reserves: Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains (losses) on sales of fixed income investments, principally bonds and mortgage loans, and interest-related hedging activities that are attributable to changes in the general level of interest rates and amortizes those deferrals over the remaining period to maturity based on groupings of individual securities sold in five-year bands. That net deferral is reported as the interest maintenance reserve (“IMR”) in the accompanying Balance Sheets. Realized capital gains (losses) are reported in income, net of federal income tax and transferred to the IMR. The asset valuation reserve (“AVR”) provides a valuation allowance for invested assets. The AVR is determined by an NAIC prescribed formula with changes reflected directly in unassigned surplus.

Subsidiaries: The accounts and operations of the Company’s subsidiaries are not consolidated with the accounts and operations of the Company.

Goodwill: Goodwill is admitted subject to an aggregate limitation of 10% of the capital and surplus in the most recently filed quarterly statement, excluding electronic data processing (“EDP”) equipment, operating system software, net deferred tax assets, and net positive goodwill. Goodwill is amortized over the period the Company benefits economically, not to exceed 10 years. Goodwill held by non-insurance subsidiaries is assessed in accordance with GAAP, subject to certain limitations for holding companies and foreign insurance subsidiaries. Goodwill is reported in other invested assets in the Balance Sheets.

Separate Accounts: Separate account assets and liabilities reported in the accompanying Balance Sheets represent funds that are separately administered, principally for annuity contracts and variable life insurance policies, and for which the contract holder, rather than the Company, bears the investment risk. Separate account obligations are intended to be satisfied from separate account assets and not from assets of the general account. Separate accounts are generally reported at fair value. The operations of the separate accounts are not included in the Statements of Operations; however, income earned on amounts initially invested by the Company in the formation of new separate accounts is included in other revenue. Fees charged to contract holders, principally mortality, policy administration, and surrender charges are included in separate account administrative and contract fees. The assets in the separate accounts are not pledged to others as collateral or otherwise restricted. For the years ended December 31, 2018, 2017 and 2016, there were no gains (losses) on transfers of assets from the general account to the separate account.

Nonadmitted Assets: Certain assets designated as nonadmitted, principally other invested assets, furniture and equipment, prepaid expenses, and other assets not specifically identified as an admitted asset within the NAIC SAP are excluded from the accompanying Balance Sheets and are charged directly to unassigned surplus.

Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred.

 

F-10

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

2. Significant Accounting Policies - (continued)

 

Policy Reserves: Reserves for life, long-term care, annuity, and deposit-type contracts are developed by actuarial methods and are determined based on interest rates, mortality tables and valuation methods prescribed by the NAIC that will provide, in the aggregate, reserves that are greater than or equal to the maximum of guaranteed policy cash values or the amounts required by the Insurance Department.

 

  •  

The Company waives deduction of deferred fractional premiums on the death of lives insured and annuity contract holders and returns any premium beyond the date of death. Surrender values on policies do not exceed the corresponding benefit reserves. At December 31, 2018 and 2017, the Company held reserves of $1,212 million and $1,281 million, respectively, on insurance in-force for which gross premiums were less than net premiums according to the standard of valuation set by the State of Michigan.

 

  •  

Reserves for individual life insurance policies are maintained using the 1941, 1958, 1980, 2001 and 2017 Commissioner’s Standard Ordinary Mortality Tables and using principally the Commissioner’s Reserve Valuation Method. Policies using the principles-based reserving method use assumptions as outlined in the Company’s PBR Actuarial Report.

 

  •  

Annuity and supplementary contracts with life contingency reserves are based principally on modifications of the 1937 Standard Annuity Table, the Group Annuity Mortality Tables for 1951, 1971, 1983, and 1994, the 1971 and 1983 Individual Annuity Mortality Tables, the A-2000 Individual Annuity Mortality Table, and the 2012 Individual Annuity Mortality Table.

 

  •  

Liabilities related to policyholder funds left on deposit with the Company are generally equal to fund balances.

 

  •  

Long-term care reserves are generally calculated using the one-year preliminary term method based on various mortality, morbidity, and lapse tables.

 

  •  

For life insurance, the calendar year exact method is used to calculate the reserve at December 31, 2018 and 2017. Reserves at December 31, 2018 and 2017 are calculated based on the rated age. For certain policies with substandard table ratings, substandard multiple extras are applied via the Lotter method.

 

  •  

For long-term care, the interpolated reserve method is used to adjust the calculated terminal reserve, and in addition an unearned premium reserve is held.

 

  •  

Tabular interest, tabular less actual reserve released, and tabular costs have been determined by formula. Tabular interest on funds not involving life contingencies is calculated as one percent of the product of such valuation rate of interest times the mean of the amount of funds subject to such valuation rate of interest held at the beginning and end of the valuation year.

 

  •  

From time to time, the Company finds it appropriate to modify certain required policy reserves because of changes in actuarial assumptions. Reserve modifications resulting from such determinations are recorded directly to unassigned surplus.

 

  •  

Reserves for variable deferred annuity contracts are calculated in accordance with NAIC Actuarial Guideline 43. The reserve is based on the worst present value of accumulated losses from the perspective of the Company. The liability is evaluated under both a standard scenario and stochastic scenario, and the Company holds the higher of the standard or stochastic values.

Reinsurance: Reinsurance ceded contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet its obligations for reinsurance ceded to it under the reinsurance agreements. Failure of the reinsurers to honor their obligations could result in losses to the Company; consequently, estimates are established for amounts deemed or estimated to be uncollectible. To minimize its exposure to significant losses from reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from similar characteristics of the insurer.

Premiums, commissions, expense reimbursements, benefits, and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.

 

F-11

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

2. Significant Accounting Policies - (continued)

 

Premiums ceded to other companies have been reported as a reduction of premium income. Amounts applicable to reinsurance ceded for future policy benefits, unearned premium reserves, and claim liabilities have been reported as reductions of these items.

The Company records a liability for unsecured policy reserves ceded to reinsurers not authorized in the State of Michigan to assume such business. Changes to those amounts are credited or charged directly to unassigned surplus. Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves. Commissions and expense allowances allowed by reinsurers on business ceded are reported as income when received. Investment income ceded includes separate account fee income, net investment income and realized investment and other gains (losses), which was ceded to the affiliated reinsurers. NAIC SAP prescribes that no gain be recognized upon inception of a reinsurance treaty. The initial gain is recorded directly to unassigned surplus and released into income over the life of the treaty.

Federal Income Taxes: Total federal income taxes are based upon the Company’s best estimate of its current and deferred tax assets or liabilities. Current tax expense is reported in the Statements of Operations as federal income tax expense if resulting from operations and within net realized capital gains (losses) if resulting from capital transactions. Changes in the balances of deferred taxes, which provide for book versus tax temporary differences, are subject to limitations and are reported within various lines within surplus. The provision for federal and foreign income taxes incurred in the Statements of Operations is different from that which would be obtained by applying the statutory federal income tax rate to income before income tax (including realized capital gains). For additional information, see the Federal Income Taxes Note for reconciliation of effective tax rate.

Participating Insurance and Policyholder Dividends: Participating business represented approximately 16% and 14% of the Company’s aggregate reserve for life contracts at December 31, 2018 and 2017, respectively. The amount of policyholders’ dividends to be paid is approved annually by the Company’s Board of Directors. Policyholder dividends are recognized when declared rather than over the term of the related policies. The determination of the amount of policyholders’ dividends is complex and varies by policy type. In general, the aggregate amount of policyholders’ dividends is calculated based upon actual interest, mortality, morbidity, persistency, and expense experience for the year, as well as management’s judgment as to the appropriate level of statutory surplus to be retained by the Company. John Hancock Life Insurance Company (“JHLICO”) was a predecessor company that was merged into JHUSA on December 31, 2009. For additional information on the closed blocks, see the Reinsurance and Closed Block Note.

Surplus Notes: Surplus notes are reported in capital and surplus, and the interest expense is not accrued unless approved for payment by the Insurance Department.

Statements of Cash Flow: Cash, cash equivalents and short-term investments in the Statements of Cash Flow represent movements of cash and highly liquid debt investments with initial maturities of one year or less.

Premiums and Benefits: Premiums for whole, term, and universal life, long-term care, annuity policies, and group annuity contracts with any mortality and morbidity risk are recognized as revenue when due. Revenues for universal life and annuity policies with mortality or morbidity risk, except for term certain supplementary contracts, consist of the entire premium received. Premiums received for variable universal life, as well as annuity policies and group annuity contracts without mortality or morbidity risk are recorded using deposit accounting and are credited directly to an appropriate policy reserve account, without recognizing premium revenue. Benefits incurred represent the total of death benefits paid, annuity benefits paid and the change in policy reserves.

Policy and Contract Claims: Policy and contract claims are determined on an individual-case basis for reported losses. Estimates of incurred but not reported losses are developed on the basis of past experience.

Guaranty Fund Assessments: Guaranty fund assessments are accrued when the Company receives knowledge of an insurance insolvency.

Variances Between NAIC SAP and GAAP: The more significant variances from GAAP are: (a) bonds would generally be reported at fair value; (b) changes in the fair value of derivative financial instruments would generally be reported as revenue unless deemed an effective hedge; (c) embedded derivatives would be bifurcated from the underlying contract or security and accounted for separately at fair value; (d) income recognition on partnerships and LLCs, which are accounted for under the equity method, would not be limited to the amount of cash distribution; (e) majority-owned noninsurance subsidiaries,

 

F-12

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

2. Significant Accounting Policies - (continued)

 

variable interest entities where the Company is the primary beneficiary, and certain other controlled entities would be consolidated; (f) changes in the balances of deferred income taxes would generally be included in net income; (g) market value adjusted (“MVA”) annuity products would be reported in the general account of the Company; (h) all assets, subject to valuation allowances, would be recognized; (i) reserves would generally be based upon the net level premium method or the estimated gross margin method with estimates of future mortality, morbidity, persistency and interest; (j) reinsurance ceded, unearned ceded premium and unpaid ceded claims would be reported as an asset; (k) AVR and the IMR would not be recorded; (l) changes to the mortgage loan valuation allowance would be reported in income; (m) surplus notes would be reported as liabilities; (n) premiums received in excess of policy charges for universal life and annuity policies would not be recognized as premium revenue and benefits would represent the excess of benefits paid over the policy account value and interest credited to the account values; (o) certain acquisition costs, such as commissions and other variable costs, directly related to acquiring new business are charged to current operations as incurred, would generally be capitalized and amortized based on profit emergence over the expected life of the policies or over the premium payment period; and (p) changes in unrealized capital gains (losses) and foreign currency translations would be presented as other comprehensive income.

The effects of the foregoing variances from GAAP on the accompanying statutory-basis financial statements have not been determined, but are presumed to be material.

3. Permitted Statutory Accounting Practices

The financial statements of the Company are presented in conformity with accounting practices prescribed or permitted by the Insurance Department.

For determining the Company’s solvency under the State of Michigan’s insurance laws and regulations, the Insurance Department recognizes only statutory accounting practices prescribed or permitted by the State of Michigan for determining and reporting the financial condition and results of operations of the Company. NAIC SAP has been adopted as a component of practices prescribed or permitted by the State of Michigan. The Director has the authority to prescribe or permit other specific practices that deviate from prescribed practices.

As of December 31, 2018 and 2017, the Director had not prescribed or permitted the Company to use any accounting practices that would result in the Company’s income or financial position to deviate from NAIC SAP.

4. Accounting Changes

Accounting changes adopted to conform to the provisions of NAIC SAP are reported as changes in accounting principles. The cumulative effect of changes in accounting principles is reported as an adjustment to unassigned surplus in the period of the change in accounting principle. The cumulative effect is the difference between the amount of unassigned surplus at the beginning of the year and the amount of unassigned surplus that would have been reported at that date if the new accounting principle had been applied retrospectively.

John Hancock Subsidiaries, LLC (“JHS”) is a wholly-owned subsidiary of the Company. During 2017, the Company reclassified its investment in JHS of $1.3 billion from Stocks - Investments in affiliates to Other invested assets. This reclassification was the result of a change in accounting principle and did not have a material impact on the Company’s financial position, results of operations, and financial statement disclosures.

Adoption of New Accounting Standards

Effective January 1, 2018, the NAIC made substantive revisions to Statement of Statutory Accounting Principles (“SSAP”) No. 100, Fair Value Measurements. The revised guidance allows the use of net asset value as a practical expedient for fair value when 1) specifically allowed in a SSAP or 2) when specific conditions exist. The guidance did not have a material impact on the Company’s financial position, results of operations and financial statement disclosures.

Effective January 1, 2018, the NAIC made substantive revisions to SSAP No. 86, Accounting for Derivative Instruments and Hedging, Income Generation, and Replication (Synthetic Asset) Transactions to adopt ASU 2017-04 Settlement of Valuation Margin. The revised guidance requires the recognition of changes in variation margin as unrealized gains/losses until the derivative contract has matured, terminated and/or expired. The guidance applies to both over-the-counter (“OTC”) derivatives and (“ETF”) exchange-traded futures, regardless of whether the counterparty or exchange considers the variation

 

F-13

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

4. Accounting Changes - (continued)

 

margin payment to be collateral or a legal settlement. The guidance did not have a material impact on the Company’s financial position, results of operations and financial statement disclosures.

In June 2017, the NAIC adopted revisions to SSAP No. 37, Mortgage Loans. The revision requires an age analysis of mortgage loans disclosure, aggregated by type, with identification of mortgage loans in which the entity is a participant or co-lender in a mortgage loan agreement, capturing: 1) recorded investment of current mortgage loans, 2) recorded investment of mortgage loans classified as 30-59 days, 60-89 days, 90-179 days, and 180 days and greater past due; 3) recorded investment of mortgage loans 90 days and 180 days past due still accruing interest; 4) interest accrued for mortgage loans 90 days and 180 days past due; and 5) recorded investment and number of mortgage loans where interest has been reduced, by percent reduced. The guidance did not have a material impact on the Company’s financial position, results of operations, and financial statement disclosures.

In March 2015, the NAIC adopted revisions to SSAP No. 1, Disclosure of Accounting Policies, Risks and Uncertainties and Other Disclosures (“SSAP 1”) regarding management’s assessment of an entity’s ability to continue as a going concern. The pronouncement requires management to assess the entity’s ability to continue as a going concern, and provide footnote disclosures when conditions give rise to substantial doubt about an entity’s ability to continue as a going concern within one year from the financial statement issuance date. The new guidance was effective December 31, 2016. The guidance did not have a material impact on the Company’s financial position, results of operations, and financial statement disclosures.

Future Adoption of New Accounting Standards

In August, 2016, the NAIC adopted substantive revisions to SSAP No. 51 – Life Contracts in order to allow principle-based reserving (“PBR”) for life insurance contracts as specified in the Valuation Manual. Current statutory accounting guidance refers to existing model laws for reserving guidance which are primarily based on formulaic methodology. Also, in June 2016, the NAIC adopted updates to Appendix A-820: Minimum Life and Annuity Reserve Standards as part of the PBR project, which incorporate relevant aspects of the 2009 revisions to the Standard Valuation Law (Model #820) into Appendix A-820. The effective date was January 1, 2017 but companies are allowed to defer adoption for three years until January 1, 2020. The Company has adopted PBR for certain products launched in 2018 and will finish implementation prior to January 1, 2020. Adoption will be on a prospective basis for policies issued on or after the adoption date, therefore, we expect no impact to surplus upon adoption.

In March 2017, the NAIC made substantive revisions to SSAP No. 69 – Statement of Cash Flow to adopt ASU 2016-15 Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments as issued by the FASB, without modifications. The revisions clarified the classification of eight specific cash flow issues with the objective of reducing diversity in practice. The amendment is to be applied retrospectively, effective for fiscal years beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted. The Company will adopt the amendment in 2019 and is currently assessing the impact of these revisions on its financial statements.

In August 2017, the NAIC adopted non-substantive revisions to SSAP No. 69 – Statement of Cash Flow to adopt ASU 2016-18 Statement of Cash Flows: Restricted Cash as issued by the FASB. The revision clarifies that restricted cash and cash equivalents shall not be reported as operating, investing or financing activities, but shall be reported with cash and cash equivalents when reconciling beginning and ending amounts on the cash flow statement. A consequential change was incorporated in SSAP No. 1 – Accounting Policies, Risks & Uncertainties and Other Disclosures to ensure information on restricted cash, cash equivalents and short-term investments is reported in the restricted asset disclosure. The revision is effective December 31, 2019, to be adopted retrospectively to allow for comparative cash flow statements. Early adoption is permitted. The Company will adopt the amendment in 2019 and is currently assessing the impact of these revisions on its financial statements.

In November 2018, the NAIC made non-substantive revisions to SSAP No. 86, Derivatives to incorporate hedge documentation and assessment efficiencies from ASU 2017-12 Targeted Improvements to Accounting for Hedging Activities as issued by FASB. The revisions will allow companies to perform subsequent assessments of hedge effectiveness qualitatively if certain conditions are met, allow companies more time to perform the initial quantitative hedge effectiveness assessment and clarify that companies may apply the “criterial terms match” method for a group of forecasted transactions if they meet the requirements. The revisions are effective beginning January 1, 2019 and early adoption is permitted. The Company will adopt the amendment in 2019 and is currently assessing the impact of these revisions on its financial statements.

 

F-14

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

4. Accounting Changes - (continued)

 

Reconciliation Between Audited Financial Statements and NAIC Annual Statements

There were no differences in net income (loss) or capital and surplus between the audited financial statements and the NAIC statements as filed as of and for the years ended December 31, 2018, 2017 and 2016.

5. Investments

Bonds

The carrying value and fair value of the Company’s investments in bonds are summarized as follows:

 

     Carrying
Value		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		     Fair
Value		  
  

 

 

  
     (in millions)  

December 31, 2018:

           

U.S. government and agencies

        $ 3,052      $ 123      $ (16 )    $ 3,159  

States and political subdivisions

      2,272        297        (13 )      2,556  

Foreign governments

      2,370        54        (12 )      2,412  

Corporate bonds

      31,188        1,749        (832 )      32,105  

Mortgage-backed and asset-backed securities

      5,674        249        (106 )      5,817  
  

 

 

  

Total bonds

        $ 44,556      $ 2,472      $    (979 )    $ 46,049  
  

 

 

  

December 31, 2017:

           

U.S. government and agencies

        $ 5,382      $ 153      $ (78 )    $ 5,457  

States and political subdivisions

      2,713        548        (3 )      3,258  

Foreign governments

      2,467        87        (17 )      2,537  

Corporate bonds

      31,028        3,455        (77 )      34,406  

Mortgage-backed and asset-backed securities

      6,380        430        (28 )      6,782  
  

 

 

  

Total bonds

        $    47,970      $    4,673      $ (203 )    $    52,440  
  

 

 

  

A summary of the carrying value and fair value of the Company’s investments in bonds at December 31, 2018, by contractual maturity, is as follows:

 

     Carrying
Value		      Fair
Value		  
  

 

 

  
     (in millions)  

Due in one year or less

        $ 930      $ 932  

Due after one year through five years

      4,914        4,923  

Due after five years through ten years

      7,546        7,628  

Due after ten years

      25,492        26,749  

Mortgage-backed and asset-backed securities

      5,674        5,817  
  

 

 

  

Total

        $    44,556      $    46,049  
  

 

 

  

The expected maturities in the foregoing table may differ from the contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

The Company maintains assets which are pledged as collateral in connection with various agreements and transactions. Additionally, the Company holds assets on deposit with government authorities as required by state law. The following table summarizes the carrying value or fair value, as applicable, of the pledged or deposited assets:

 

     December 31,  
     2018      2017  
  

 

 

  
     (in millions)  

At fair value:

      

Bonds and cash pledged in support of over-the-counter derivative instruments

        $ 265      $ 135  

Bonds and cash pledged in support of exchange-traded futures

      362        364  

Bonds and cash pledged in support of cleared interest rate swaps

      337        192  
  

 

 

  

Total fair value

        $ 964      $ 691  
  

 

 

  

At carrying value:

      

Bonds on deposit with government authorities

        $ 14      $ 16  

Mortgage loans pledged in support of real estate

      -        2  

Bonds held in trust

      93        93  

Pledged collateral under reinsurance agreements

      2,508        4,187  
  

 

 

  

Total carrying value

        $    2,615      $    4,298  
  

 

 

  

At December 31, 2018 and 2017, the Company held below investment grade corporate bonds of $2,856 million and $2,238 million, with an aggregate fair value of $2,830 million and $2,412 million, respectively. The Company performs periodic evaluations of the relative credit standing of the issuers of these bonds.

The Company has a process in place to identify securities that could potentially have an impairment that is other-than-temporary. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions, and other similar factors. This process also involves monitoring late payments, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues.

At the end of each quarter, the MFC Loan Review Committee reviews all securities where there is evidence of impairment or a significant unrealized loss at the Balance Sheet date. Impairment is considered to have occurred, based on management’s judgment, when it is deemed probable that the Company will not be able to collect all amounts due according to the debt security’s contractual terms. The analysis focuses on each company’s or project’s ability to service its debts in a timely fashion and the length of time the security has been trading below amortized cost. The results of this analysis are reviewed by the Transaction and Portfolio Review Committee at MFC. This committee includes MFC’s Chief Financial Officer, Chief Investment Officer, Chief Risk Officer, Chief Credit Officer, and other senior management. This quarterly process includes a fresh assessment of the credit quality of each investment in the entire fixed maturity security portfolio.

The Company considers relevant facts and circumstances in evaluating whether the impairment of a security is other-than-temporary. Relevant facts and circumstances considered include (1) the length of time the fair value has been below cost; (2) the financial position of the issuer, including the current and future impact of any specific events; and (3) the Company’s ability and intent to hold the security to maturity or until it recovers in value. To the extent the Company determines that a security, other than loan-backed and structured securities, is deemed to be other-than-temporarily impaired, the difference between book value and fair value would be charged to income. For loan-backed and structured securities in an unrealized loss position, where the Company does not intend to sell or is not likely to be required to sell the security, the Company calculates an other-than-temporary impairment loss by subtracting the net present value of the projected future cash flows of the security from the amortized cost of the security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment. The projection of future cash flows is subject to the same analysis the Company applies to its overall impairment evaluation process, as noted above, which incorporates security specific information such as late payments, downgrades by rating agencies, key financial ratios, financial statements, and fundamentals of the industry and geographic area in which the issuer operates, as well as overall macroeconomic conditions. The cash flow estimates, including prepayment assumptions, are based on data from third-party data sources or internal estimates, and are driven by assumptions regarding the underlying collateral, including default rates, recoveries, and changes in value.

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

There are a number of significant risks and uncertainties inherent in the process of monitoring impairments and determining if impairment is other-than-temporary. These risks and uncertainties include (1) the risk that the Company’s assessment of an issuer’s ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer; (2) the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated; (3) the risk that fraudulent information could be provided to the Company’s investment professionals who determine the fair value estimates and other-than-temporary impairments; and (4) the risk that new information obtained by the Company or changes in other facts and circumstances lead the Company to change its intent to hold the security to maturity or until it recovers in value. Any of these situations could result in a charge to income in a future period.

The following tables disclose the impact of Other-Than-Temporary Impairments (OTTI) on Carrying Values (CV), including the Net Present Value (NPV) of Projected Cash Flows (CF) less than Book Value (BV) by CUSIP for loan-backed and structured securities:

Year Ended December 31, 2018

 

CUSIP#

    CV Before
OTTI		      NPV of
Projected CFs		      Credit OTTI
Recognized
in Loss		      CV After
OTTI		      Fair
Value		  
  

 

 

  
       $ -      $ -      $ -      $ -      $ -  
     -        -        -        -        -  
     -        -        -        -        -  
  

 

 

  

Total

        $    -      $    -      $    -      $    -      $    -  
  

 

 

  

Year Ended December 31, 2017

 

CUSIP#

    CV Before
OTTI		      NPV of
Projected CFs		      Credit OTTI
Recognized
in Loss		      CV After
OTTI		      Fair
Value		  
  

 

 

  

671451CZ0

        $ 2      $ -      $ 2      $ -      $ -  
     -        -        -        -        -  
     -        -        -        -        -  
  

 

 

  

Total

        $    2      $    -      $    2      $    -      $    -  
  

 

 

  

When a decline in fair value is other-than-temporary, an impairment loss is recognized as a realized loss equal to the entire difference between the bond’s carrying value or amortized cost and its fair value.

 

F-17

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

The following table shows gross unrealized losses and fair values of bonds, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

 

                                              
     Less than 12 months      12 months or more      Total  
   
     Fair Value     Gross
Unrealized
Losses		      Fair
Value		     Gross
Unrealized
Losses		      Fair Value     Gross
Unrealized
Losses		  
   
                  (in millions)               

December 31, 2018:

                   

U.S. government and agencies

        $ 384     $ (2 )     $ 205     $ (14 )     $ 589     $ (16 ) 

States and political subdivisions

      199       (5 )       113       (8 )       312       (13 ) 

Foreign governments

      10          -        75       (12 )       85       (12 ) 

Corporate bonds

         14,077       (583 )          3,429       (249 )          17,506       (832 ) 

Mortgage-backed and asset-backed securities

      1,769       (51 )       967       (55 )       2,736       (106 ) 

Total

        $ 16,439     $ (641 )     $ 4,789     $ (338 )     $ 21,228     $ (979 ) 
                                                  
                                              
     Less than 12 months      12 months or more      Total  
   
     Fair Value     Gross
Unrealized
Losses		      Fair
Value		     Gross
Unrealized
Losses		      Fair Value     Gross
Unrealized
Losses		  
   
                  (in millions)               

December 31, 2017:

                   

U.S. government and agencies

        $ 2,805     $ (18 )     $ 1,137     $ (60 )     $ 3,942     $ (78 ) 

States and political subdivisions

      45       -        62       (3 )       107       (3 ) 

Foreign governments

      27       -        43       (17 )       70       (17 ) 

Corporate bonds

         2,028       (14 )       2,534       (63 )       4,562       (77 ) 

Mortgage-backed and asset-backed securities

      540       (3 )       772       (25 )       1,312       (28 ) 

Total

        $ 5,445     $ (35 )     $ 4,548     $ (168 )     $ 9,993     $ (203 ) 
                                                  

At December 31, 2018 and 2017, there were 1,383 and 483 bonds that had a gross unrealized loss, of which the single largest unrealized loss was $43 million and $40 million, respectively. The Company anticipates that these bonds will perform in accordance with their contractual terms and the Company currently has the ability and intent to hold these bonds until they recover or mature. Unrealized losses can be created by rising interest rates or by rising credit concerns and hence widening credit spreads. Credit concerns are apt to play a larger role in the unrealized loss on below investment grade securities. Unrealized losses on investment grade securities principally relate to changes in interest rates or changes in credit spreads since the securities were acquired. Credit rating agencies’ statistics indicate that investment grade securities have been found to be less likely to develop credit concerns.

For the years ended December 31, 2018, 2017 and 2016, realized capital losses include $72 million, $3 million, and $61 million related to bonds that have experienced an other-than-temporary decline in value and were comprised of 21, 4, and 8 securities, respectively.

The total recorded investment in restructured corporate bonds at December 31, 2018, 2017 and 2016 was $0 million, $3 million, and $16 million, respectively. There were 1, 1, and 2 restructured corporate bonds for which an impairment was recognized during 2018, 2017 and 2016, respectively. The Company accrues interest income on impaired securities to the

 

F-18

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

extent deemed collectible and the loan continues to perform under its original or restructured contractual terms. Interest income on non-performing loans generally is recognized on a cash basis.

The sales of investments in bonds resulted in the following:

 

     Years Ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Proceeds

        $    28,102         $    17,663         $    20,018  

Realized gross gains

      729       557       524  

Realized gross losses

      (407 )      (33 )      (112 ) 

The Company had no nonadmitted accrued investment income from bonds (unaffiliated) at December 31, 2018 and 2017.

Affiliate Transactions

In 2018, the Company sold certain bonds to an affiliate, Manulife Reinsurance Bermuda Limited (“MRBL”). These bonds had a book value of $449 million and fair value of $501 million. The Company recognized $52 million in pre-tax realized gains before transfer to the IMR.

In 2018, the Company sold certain bonds to an affiliate, JHNY. These bonds had a book value of $293 million and fair value of $313 million. The Company recognized $20 million in pre-tax realized gains before transfer to the IMR.

In 2018, the Company sold certain bonds and stocks to an affiliate, John Hancock Funding Company LLC, (“JHFLLC”). These bonds and stocks had a book value of $53 million and fair value of $53 million. The Company did not recognize any pre-tax realized gains before transfer to the IMR.

In 2018, the Company acquired at fair value, certain bonds from an affiliate, JHNY, for $647 million.

In 2018, the Company acquired at fair value, certain bonds from an affiliate, JHLH, for $48 million.

In 2017, the Company sold certain private placements to an affiliate, The Manufacturers Life Insurance Company Bermuda Branch (“MLI Bermuda”). These private placements had a book value of $208 million and fair value of $226 million. The Company recognized $18 million in pre-tax realized gains before transfer to the IMR.

In 2017, the Company sold certain bonds to an affiliate, MRBL. These bonds had a book value of $204 million and fair value of $227 million. The Company recognized $23 million in pre-tax realized gains before transfer to the IMR.

In 2017, the Company sold certain bonds to an affiliate, JHLH. These bonds had a book value of $263 million and fair value of $304 million. The Company recognized $41 million in pre-tax realized gains before transfer to the IMR.

In 2017, the Company sold certain bonds to an affiliate, John Hancock Reassurance Company Limited (“JHRECO”). These bonds had a book value of $172 million and fair value of $200 million. The Company recognized $28 million in pre-tax realized gains before transfer to the IMR.

In 2017, the Company sold certain bonds to its indirect parent, MLI. These bonds had a book value of $448 million and fair value of $521 million. The Company recognized $73 million in pre-tax realized gains before transfer to the IMR.

In 2017, the Company sold certain bonds to an affiliate, Manulife Securities Ltd Partner (“MSLP”). These bonds had a book value of $412 million and fair value of $435 million. The Company recognized $23 million in pre-tax realized gains before transfer to the IMR.

In 2017, the Company acquired at fair value, certain bonds from an affiliate, JHLH, for $177 million.

 

F-19

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

In 2017, the Company acquired at fair value, certain bonds from an affiliate, MRBL, for $100 million.

In 2016, the Company transferred certain bonds to an affiliate, JHRECO, in lieu of a reinsurance cash settlement. These bonds had a book value of $676 million and fair value of $751 million. The Company recognized $75 million in pre-tax realized gains before transfer to the IMR.

In 2016, the Company sold certain bonds to an affiliate, Manulife Financial Singapore (“MLS”). These bonds had a book value of $93 million and fair value of $100 million. The Company recognized $7 million in pre-tax realized gains before transfer to the IMR.

In 2016, the Company sold certain bonds to an affiliate, Manubank (“MB”). These bonds had a book value of $12 million and fair value of $12 million. The Company did not recognize any pre-tax realized gains or losses before transfer to the IMR.

In 2016, the Company sold certain bonds to an affiliate Manulife International Ltd (“MIL”). These bonds had a book value of $67 million and fair value of $75 million. The Company recognized $8 million in pre-tax realized gains before transfer to the IMR.

In 2016, the Company sold certain bonds to an affiliate MLRL. These bonds had a book value of $25 million and fair value of $29 million. The Company recognized $4 million in pre-tax realized gains before transfer to the IMR.

In 2016, the Company sold certain bonds to an affiliate Manulife Reinsurance Ltd Partner (“MRLP”). These bonds had a book value of $211 million and fair value of $221 million. The Company recognized $10 million in pre-tax realized gains before transfer to the IMR.

In 2016, the Company received, at fair value, certain bonds from an affiliate, JHNY in lieu of reinsurance cash settlement, for $26 million.

In 2016, the Company acquired, at fair value, certain bonds from an affiliate, JHNY, for $343 million.

In 2016, the Company acquired, at fair value, certain bonds from an affiliate, MIL, for $60 million.

In 2016, the Company acquired, at fair value, certain bonds from an affiliate, MLRL, for $29 million.

In 2016, the Company acquired, at fair value, certain bonds from an affiliate, MLS, for $21 million.

In 2016, the Company acquired, at fair value, certain bonds from an affiliate, JHLH, for $140 million.

 

F-20

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

Preferred and Common Stocks

Cost and fair value of the Company’s investments in preferred and common stocks are summarized as follow:

 

     Cost      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		     Fair Value  
  

 

 

  
     (in millions)  

December 31, 2018:

           

Preferred stocks:

           

Nonaffiliated

        $ 14      $ 1      $ -     $ 15  

Affiliates

      -        -        -       -  

Common stocks:

           

Nonaffiliated

      791        157        (30 )      918  

Affiliates*

      1,589        1,324        -       2,913  
  

 

 

  

Total stocks

        $    2,394      $   1,482      $    (30)     $    3,846  
  

 

 

  
     Cost      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		     Fair Value  
  

 

 

  
     (in millions)  

December 31, 2017:

           

Preferred stocks:

           

Nonaffiliated

        $ 11      $ 3      $ -     $ 14  

Affiliates

      -        -        -       -  

Common stocks:

           

Nonaffiliated

      1,131        235        (12 )      1,354  

Affiliates*

      1,589        971        -       2,560  
  

 

 

  

Total stocks

        $ 2,731      $ 1,209      $ (12)     $ 3,928  
  

 

 

  

*Affiliates - fair value represents the carrying value

 

At December 31, 2018 and 2017, there were 309 and 136 nonaffiliated equity securities that had a gross unrealized loss excluding securities that have been written down to zero. The single largest unrealized loss was $3 million and $3 million at December 31, 2018 and 2017, respectively. The Company anticipates that these equity securities will recover in value in the near term.

The Company has a process in place to identify equity securities that could potentially have an impairment that is other-than-temporary. The Company considers relevant facts and circumstances in evaluating whether the impairment of a security is other-than-temporary. Relevant facts and circumstances include (1) the length of time the fair value has been below cost; (2) the financial position of the issuer; and (3) the Company’s ability and intent to hold the security until it recovers. To the extent the Company determines that a security is deemed to be other-than-temporarily impaired, the difference between book value and fair value would be charged to income.

For the years ended December 31, 2018, 2017 and 2016, realized capital losses include $11 million, $2 million, and $24 million related to preferred and common stocks that have experienced an other-than-temporary decline in value and were comprised of 95, 81, and 108 securities, respectively. These are primarily made up of impairments on public and private common stocks.

 

F-21

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

Affiliate Transactions

In 2018, the Company sold certain common stocks to an affiliate, MRBL. These stocks had a book value of $264 million and fair value of $306 million. The Company recognized $42 million in pre-tax realized gains.

In 2017, the Company acquired at fair value, certain common stocks from an affiliate, JHLH, for $43 million.

Mortgage Loans on Real Estate

At December 31, 2018 and 2017, the mortgage loan portfolio was diversified by geographic region and specific collateral property type as displayed below. The Company controls credit risk through credit approvals, limits, and monitoring procedures.

December 31, 2018:

 

Property Type    Carrying
Value		       

Geographic

Concentration

    Carrying
Value		  

 

       

 

  
     (in millions)             (in millions)  

Apartments

        $ 2,828        East North Central        $ 1,523  

Industrial

      1,020        East South Central      253  

Office buildings

      3,241        Middle Atlantic      1,936  

Retail

      3,406        Mountain      516  

Agricultural

      133        New England      642  

Agribusiness

      247        Pacific      3,823  

Mixed use

      7        South Atlantic      2,367  

Other

      1,226        West North Central      336  

Allowance

      (23 )       West South Central      709  
        Canada / Other      3  
        Allowance      (23 ) 
  

 

 

          

 

 

  

Total mortgage loans on real estate

        $    12,085        Total mortgage loans on real estate        $    12,085  
  

 

 

          

 

 

  

December 31, 2017:

 

Property Type    Carrying
Value		       

Geographic

Concentration

    Carrying
Value		  

 

       

 

  
     (in millions)             (in millions)  

Apartments

        $ 2,560        East North Central        $ 1,574  

Industrial

      907        East South Central      187  

Office buildings

      3,168        Middle Atlantic      1,868  

Retail

      3,652        Mountain      527  

Agricultural

      139        New England      579  

Agribusiness

      303        Pacific      3,604  

Mixed use

      22        South Atlantic      2,449  

Other

      1,163        West North Central      384  

Allowance

      (14 )       West South Central      660  
        Canada / Other      82  
        Allowance      (14 ) 
  

 

 

          

 

 

  

Total mortgage loans on real estate

        $    11,900        Total mortgage loans on real estate        $    11,900  
  

 

 

          

 

 

  

The aggregate mortgages outstanding to any one borrower do not exceed $425 million.

During 2018, the respective maximum and minimum lending rates for mortgage loans issued were 0.00% and 0.00% for agricultural loans and 8.30% and 3.26% for commercial loans. The Company issued no purchase money mortgages in 2018 and 2017. At the issuance of a loan, the percentage of any one loan to value of security, exclusive of insured, guaranteed, or

 

F-22

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

purchase money mortgages does not exceed 75%. Impaired mortgage loans without an allowance for credit losses were $0 million, $0 million, and $0 million at December 31, 2018, 2017 and 2016, respectively. The average recorded investment in impaired loans was $56 million, $31 million, and $25 million at December 31, 2018, 2017 and 2016, respectively. The Company recognized $4 million, $0 million, and $1 million of interest income during the period the loans were impaired for the years ended December 31, 2018, 2017 and 2016, respectively.

The following table shows the age analysis of mortgage loans aggregated by type:

 

     Farm      Residential      Commercial      Mezzanine      Total  
  

 

 

  
     (in millions)  

December 31, 2018:

 

Recorded Investment

               

Current

        $    380          $    -          $    11,707          $    21          $    12,108  

30 - 59 Days Past Due

      -        -        -        -        -  

60 - 89 Days Past Due

      -        -        -        -        -  

90 - 179 Days Past Due

      -        -        -        -        -  

180 + Days Past Due

      -        -        -        -        -  

December 31, 2017:

               

Recorded Investment

               

Current

        $ 442          $ -          $ 11,472          $ -          $ 11,914  

30 - 59 Days Past Due

      -        -        -        -        -  

60 - 89 Days Past Due

      -        -        -        -        -  

90 - 179 Days Past Due

      -        -        -        -        -  

180 + Days Past Due

      -        -        -        -        -  

The Company had no recorded investment of mortgage loans 90 to 179 days or 180 days or greater past due still accruing interest or where interest has been reduced in 2018 and 2017. The Company was not a participant or co-lender in a mortgage loan agreement in 2018 and 2017.

Generally, the terms of the restructured mortgage loans call for the Company to receive some form or combination of an equity participation in the underlying collateral, excess cash flows or an effective yield at the maturity of the loans sufficient to meet the original terms of the loans. There are no contractual commitments made to extend credit to debtors owning receivables whose terms have been modified in troubled debt restructurings. The Company accrues interest income on impaired loans to the extent deemed collectible and the loan continues to perform under its original or restructured contractual terms. Interest income on non-performing loans generally is recognized on a cash basis.

For mortgage loans, the Company evaluates credit quality through regular monitoring of credit related exposures, considering both qualitative and quantitative factors in assigning an internal risk rating (“IRR”). These ratings are updated at least annually.

The carrying value of mortgage loans by IRR was as follows:

 

     December 31,  
     2018      2017  
  

 

 

  
     (in millions)  

AAA

        $ 279      $ 250  

AA

      2,814        2,842  

A

      5,505        5,585  

BBB

      3,370        3,095  

BB

      61        98  

B and lower and unrated

      56        30  
  

 

 

  

Total

        $    12,085      $    11,900  
  

 

 

  

 

F-23

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

Affiliate Transactions

In 2018, the Company sold certain mortgages to an affiliate, JHLH. These mortgages had a book value of $8 million and fair value of $8 million at the date of the transaction. The Company recognized $0 million in pre-tax realized losses before transfer to the IMR.

In 2018, the Company acquired, at fair value, certain mortgages from an affiliate, JHNY, for $105 million.

In 2018, the Company acquired, at fair value, certain mortgages from an affiliate, JHLH, for $29 million.

In 2017, the Company transferred two mortgages to an affiliate, Clarendon Real Estate, LLC (“CRE LLC”). The mortgages had a book value of $7 million and fair value of $7 million at the date of the transaction. The Company did not recognize any pre-tax realized gains or losses before transfer to the IMR.

Real Estate

The composition of the Company’s investment in real estate is summarized as follows:

 

     December 31,  
     2018     2017  
  

 

 

  
     (in millions)  

Properties occupied by the company

        $ 236     $ 396  

Properties held for the production of income

         4,730          6,086  

Properties held for sale

      -       -  

Less accumulated depreciation

      (953 )      (760 ) 
  

 

 

  

Total

        $ 4,013     $ 5,722  
  

 

 

  

The Company recorded $0 million, $0 million, and $38 million of impairments on real estate investments during the years ended December 31, 2018, 2017 and 2016, respectively.

Affiliate Transactions

In 2018, the Company entered into a joint venture arrangement with the University of California Board of Regents (“UC”). As part of this arrangement, the Company sold six U.S. commercial real estate properties and one other invested asset with the characteristics of real estate to Broadway Green LLC, Broadway Wacker LLC and Broadway Congress LLC, all joint venture entities formed by UC. The Company provides management services to these joint ventures and owns 10% of their equity. The real estate properties had a book value of $728 million and fair value of $985 million which resulted in pre-tax realized gains to operations of $231 million (after 10% deferral of realized gain).

In 2017, the Company entered into an arrangement to sell four real estate properties to Hancock U.S Real Estate Fund, LP. These properties had a book value of $325 million and fair value of $471 million, resulting in pre-tax realized gains of $135 million and a deferred gain of $10 million. As part of this arrangement, the Company also committed approximately $44 million for an 11.7% equity interest in the fund.

On May 20, 2016, the Company entered into an arrangement to sell three real estate properties to Manulife U.S. Real Estate Investment Trust (“REIT”) for $777 million. These properties had a book value of $524 million and fair value of $769 million. Approximately 62% of the $245 million gain from operations was ceded to an affiliate reinsurer. The Company recognized an after-tax gain, after reinsurance of $60 million.

 

F-24

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

Other Invested Assets

The Company had no investments in partnerships or LLCs that exceed 10% of its admitted assets at December 31, 2018 and 2017.

Other invested assets primarily consist of investments in partnerships and LLCs. The Company recorded $39 million, $0 million, and $99 million of impairments on partnerships and LLCs during the years ended December 31, 2018, 2017 and 2016, respectively. These impairments are based on significant judgement by the Company in determining whether the objective evidence of other-than-temporary impairment exists. The Company considers relevant facts and circumstances in evaluating whether the impairment of an other invested asset is other-than-temporary. Relevant facts and circumstances include (1) the length of time the fair value has been below cost; (2) the financial position of the investee; (3) the Company’s ability and intent to hold the other invested asset until it recovers. To the extent the Company determines that an other invested asset is deemed to be other-than-temporarily impaired, the difference between book and fair value would be charged to income.

Affiliate Transactions

In 2018, the Company entered into an agreement to launch John Hancock Infrastructure Fund, LP (the “Fund”), a closed-end pooled fund that will offer investors the opportunity to invest alongside the Company in a targeted infrastructure strategy focused primarily on U.S investments. The fund was seeded with the partial sale of 9 assets owned by the Company. The assets sold had a book value of $1,045 million and fair value of $1,094 million which resulted in a gain to operations of $49 million.

In 2018, the Company acquired at fair value, certain other invested assets from an affiliate, JHNY, for $4 million.

In 2018, the Company acquired at fair value, certain other invested assets from an affiliate, JHLH, for $9 million.

In 2018, the Company acquired at fair value, certain other invested assets from an affiliate, John Hancock Partnership Holdings I (“JHPH I”), for $39 million.

In 2018, the Company acquired at fair value, certain other invested assets from an affiliate, John Hancock Partnership Holdings II (“JHPH II”), for $39 million.

In 2018, the Company acquired at fair value, certain other invested assets from an affiliate, JHFLLC, for $6 million.

Other

The subprime lending sector, also referred to as B-paper, near-prime, or second chance lending, is the sector of the mortgage lending industry which lends to borrowers who do not qualify for prime market interest rates because of poor or insufficient credit history.

For purposes of this disclosure, subprime exposure is defined as the potential for financial loss through direct investment, indirect investment, or underwriting risk associated with risk from the subprime lending sector. For purposes of this note, subprime exposure is not limited solely to the risk associated with holding direct mortgage loans, but also includes any indirect risk through investments in asset-backed or structured securities, hedge funds, common stock, subsidiaries and affiliates, and insurance product issuance.

Although it can be difficult to determine the indirect risk exposures, it should be noted that not only does it include expected losses, it also includes the potential for losses that could occur due to significantly depressed fair value of the related assets in an illiquid market.

The Company had no direct exposure through investments in subprime mortgage loans as of December 31, 2018 or 2017.

Management considers several factors when classifying a structured finance or residential mortgage-backed security holding as “subprime” or placing a security in the highest risk category. These factors include the transaction’s weighted average

 

F-25

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

FICO or credit score, loan-to-value ratio (LTV), geographic composition, lien position, loan purpose, and loan documentation.

The Company has entered into certain repurchase agreements with an aggregate carrying value of $0 million and $0 million as of December 31, 2018 and 2017, respectively. For such agreements, the Company agrees to a specified term, price, and interest rate through the date of the repurchase.

The Company established a facility with an affiliate, MRBL whereby cash collateral can be received under a repurchase agreement program. There was no repurchase agreement activity in 2018 and 2017.

For securities lending transactions, the Company’s policy is to require a minimum of 102% of the fair value of securities loaned to be maintained as collateral. Positions are marked to market and adjusted on a daily basis to ensure the 102% margin requirement is maintained. There were no securities on loan as of December 31, 2018 or 2017.

 

F-26

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

5. Investments - (continued)

 

Net Investment Income and Net Realized and Other Gains (Losses)

Major categories of the Company’s net investment income are summarized as follows:

 

     2018     2017     2016  
  

 

 

  
     (in millions)  

Income:

       

Bonds

        $ 2,279     $ 2,146     $ 2,232  

Preferred stocks

      -       -       -  

Common stocks

      126       23       225  

Mortgage loans on real estate

      594       610       609  

Real estate

      638       704       762  

Policy loans

      175       176       167  

Cash, cash equivalents and short-term investments

      38       33       18  

Other invested assets

      1,069       1,014       506  

Derivatives

      427       483       594  

Other income

      (21 )      12       30  
  

 

 

  

Total investment income

         5,325          5,201          5,143  

Expenses

       

Investment expenses

      (424 )      (509 )      (529 ) 

Investment taxes, licenses and fees, excluding federal income taxes

      (76 )      (93 )      (94 ) 

Investment interest expense

      (48 )      (50 )      (82 ) 

Depreciation on real estate and other invested assets

      (112 )      (123 )      (130 ) 
  

 

 

  

Total investment expenses

      (660 )      (775 )      (835 ) 
  

 

 

  

Net investment income

        $ 4,665     $ 4,426     $ 4,308  
  

 

 

  

Realized capital gains (losses) and amounts transferred to the IMR are as follows:

 

     2018     2017     2016  
  

 

 

  
     (in millions)  

Realized capital gains (losses)

        $ 730     $ 722     $ (494 ) 

Less amount transferred to the IMR (net of related tax benefit (expense) of $2 in 2018, $(475) in 2017, and $31 in 2016)

      (6 )      882       (57 ) 
  

 

 

  

Realized capital gains (losses) before tax

      736       (160 )      (437 ) 

Less federal income taxes on realized capital gains (losses) before effect of transfer to the IMR

         396          243          496  
  

 

 

  

Net realized capital gains (losses)

        $ 340     $ (403 )    $ (933 ) 
  

 

 

  

6. Derivatives

Derivatives are financial contracts, the value of which is derived from underlying interest rates, foreign exchange rates, credit, equity price movements, indices or other market risks arising from on-balance sheet financial instruments and selected anticipated transactions. The Company uses derivatives including swaps, forward and futures agreements, floors, and options to manage current and anticipated exposures to changes in interest rates, foreign exchange rates, credit and equity market prices.

 

F-27

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

6. Derivatives - (continued)

 

Over-the-counter (“OTC”) bilateral swaps are contractual agreements between the Company and a counterparty to exchange a series of cash flows based upon rates applied to a notional amount. For interest rate swaps, counterparties generally exchange fixed or floating interest rate payments based on a notional value in a single currency. Cross currency swaps involve the exchange of principal amounts between parties as well as the exchange of interest payments in one currency for the receipt of interest payments in another currency. Total return swaps are contracts that involve the exchange of payments based on changes in the values of a reference asset, including any returns such as interest earned on these assets, in return for amounts based on reference rates specified in the contract.

Cleared OTC interest rate swaps are contractual agreements between the Company and a counterparty whereby the transaction must be cleared through a central clearing house, and subject to mandatory margin and reporting requirements.

Forward and futures agreements are contractual obligations to buy or sell a financial instrument or foreign currency on a predetermined future date at a specified price. Forward contracts are OTC contracts negotiated between counterparties, whereas futures agreements are contracts with standard amounts and settlement dates that are traded on regulated exchanges.

Interest rate floors are contracts with counterparties which require payment of a premium for the right to receive payments when the market interest rate on specified future dates falls below the agreed upon strike price. Interest rate treasury lock contracts are customized agreements securing current interest rates on Treasury securities for payment on a future date.

Options are contractual agreements whereby the holder has the right, but not the obligation, to buy (call option) or sell (put option) a security, exchange rate, interest rate, or other financial instrument at a predetermined price/rate within a specified time.

Swaptions are contractual agreements whereby the holder has the right, but not obligation, to enter into a given swap agreement on a specified future date.

Types of Derivatives and Derivative Strategies

Interest Rate Contracts. The Company uses interest rate futures contracts, OTC interest rate swap agreements, cleared interest rate swap agreements, swaptions, and interest rate treasury locks as part of its overall strategies of managing the duration of assets and liabilities or the average life of certain asset portfolios to specified targets. Interest rate swap agreements are contracts with counterparties to exchange interest rate payments of a differing character (i.e., fixed-rate payments exchanged for variable-rate payments) based on an underlying principal balance (notional principal). The net differential to be paid or received on interest rate swap agreements is accrued and recognized as a component of net investment income.

The Company uses interest rate swap agreements in effective cash flow and fair value hedge accounting relationships. These derivatives hedge the variable cash flows associated with certain floating-rate bonds, as well as, future fixed income asset acquisitions, which will support the Company’s long-term care and life insurance businesses. These derivatives reduce the impact of future interest rate changes on the cost of acquiring adequate assets to support the investment income assumptions used in pricing these products. For its fair value hedging relationships, the Company uses interest rate swap agreements and interest rate treasury locks to hedge the risk of changes in fair value of existing fixed rate assets and liabilities arising from changes in benchmark interest rates.

Inflation swaps are used to reduce inflation risk generated from inflation-indexed liabilities. Inflation swaps are classified within interest rate swaps for disclosure purposes. The Company utilizes inflation swaps in effective hedge accounting relationships and other hedging relationships.

The Company uses exchange-traded interest rate futures primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, and to hedge against changes in interest rates on anticipated liability issuances by replicating U.S. Treasury or swap curve performance. The Company utilizes exchange-traded interest rate futures in other hedging relationships.

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

6. Derivatives - (continued)

 

The Company also uses interest rate floors and swaptions primarily to protect against interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate floors in other hedging relationships.

Foreign Currency Contracts. Foreign currency derivatives, including foreign currency swaps, foreign currency forwards, and foreign currency futures are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies.

Cross currency rate swap agreements are used to manage the Company’s exposure to foreign exchange rate fluctuations, interest rate fluctuations, or both, on foreign currency financial instruments. Cross currency rate swap agreements are contracts to exchange the currencies of two different countries at the same rate of exchange at specified future dates. The net differential to be paid or received on cross currency rate swap agreements is accrued and recognized as a component of net investment income.

Under foreign currency forwards, the Company agrees with other parties to deliver a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The maturities of these forwards correspond with the future periods in which the foreign currency transactions are expected to occur. The Company utilizes currency forwards in effective hedge accounting relationships and other hedging relationships.

Foreign currency futures are contractual obligations to buy or sell a foreign currency on a predetermined future date at a specified price. These contracts are standardized contracts traded on an exchange. The Company utilizes foreign exchange futures in other hedging relationships.

Equity Market Contracts. Total return swaps are contracts that involve the exchange of payments based on changes in the value of a reference asset, including any returns such as interest earned on these assets, in exchange for amounts based on reference rates specified in the contract. The Company utilizes total return swaps in effective hedge accounting relationships and other hedging relationships.

Equity index options are contractual agreements whereby the holder has the right, but not the obligation, to buy (call option) or sell (put option) an underlying equity market index on or before a specified future date at a specified price. The Company utilizes equity index options in other hedging relationships.

Equity index futures contracts are contractual obligations to buy or sell a specified amount of an underlying equity index at an agreed contract price on a specified date. Equity index futures are contracts with standard amounts and settlement dates that are traded on regulated exchanges. The Company utilizes equity index futures in other hedging relationships.

Credit Contracts. The Company manages credit risk through the issuance of credit default swaps (“CDS”). A CDS is a derivative instrument representing an agreement between two parties to exchange the credit risk of a single specified entity or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of “reference entities”), in return for a periodic premium. CDS contracts typically have a five-year term.

Replication Synthetic Assets. Replication synthetic asset transactions (“RSATs”) are derivative transactions made in combination with a cash instrument in order to reproduce the investment characteristic of an otherwise permissible investment. The Company uses interest rate swaps and credit default swaps in these transactions when direct investments are either too expensive to acquire or otherwise unavailable in the market. Such derivatives can only be RSATs and not hedging vehicles.

 

F-29

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

6. Derivatives - (continued)

 

The table below provides a summary of the gross notional amount and fair value of derivatives contracts for all derivatives in effective hedge accounting relationships, other hedging relationships, and RSATs:

 

          December 31, 2018  
          Notional
Amount		      Carrying
Value
Assets		      Carrying
Value
Liabilities		      Fair
Value
Assets		      Fair
Value
Liabilities		  
     

 

 

  
     (in millions)  

Effective Hedge Accounting Relationships

               

Fair value hedges

   

Interest rate swaps

        $ 1,919      $ -      $ -      $ 259      $ 98  
  

Foreign currency swaps

      17        -        3        -        5  

Cash flow hedges

   

Interest rate swaps

      6,987        -        -        484        362  
  

Foreign currency swaps

      421        61        -        55        -  
  

Foreign currency forwards

      66        -        -        -        7  
  

Interest rate treasury locks

      1,351        -        -        27        12  
  

Equity total return swaps

      32        -        -        -        6  
  

 

 

  

Total Derivatives in Effective Hedge Accounting Relationships

        $ 10,793      $ 61      $ 3      $ 825      $ 490  
  

 

 

  

Other Hedging Relationships

               
  

Interest rate swaps

        $   137,873      $ 7,336      $ 3,287      $ 7,336      $ 3,287  
  

Interest rate treasury locks

      11,980        277        77        277        77  
  

Interest rate options

      8,574        230        -        230        -  
  

Interest rate futures

      7,977        -        -        -        -  
  

Foreign currency swaps

      1,439        341        269        341        269  
  

Foreign currency forwards

      718        19        14        19        14  
  

Foreign currency futures

      1,040        -        -        -        -  
  

Equity total return swaps

      394        11        10        11        10  
  

Equity index options

      4,818        236        59        236        59  
  

Equity index futures

      4,178        -        -        -        -  
  

Credit default swaps

      -        -        -        -        -  
  

 

 

  

Total Derivatives in Other Hedging Relationships

        $ 178,991      $ 8,450      $ 3,716      $ 8,450      $ 3,716  
  

 

 

  

Replication Synthetic Asset Transactions

               
  

Interest rate swaps

        $ 3,135      $ -      $ -      $ 19      $ 188  
  

Credit default swaps

      -        -        -        -        -  
  

 

 

  

Total Derivatives in Replication Synthetic Asset Transactions

        $ 3,135      $ -      $ -      $ 19      $ 188  
  

 

 

  

Total Derivatives

        $    192,919      $    8,511      $    3,719      $    9,294      $    4,394  
     

 

 

  

 

F-30

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

6. Derivatives - (continued)

 

          December 31, 2017  
     

 

 

  
          Notional
Amount		      Carrying
Value
Assets		      Carrying
Value
Liabilities		      Fair Value
Assets		      Fair
Value
Liabilities		  
     

 

 

  
     (in millions)  

Effective Hedge Accounting Relationships

               

Fair value hedges

   

Interest rate swaps

        $ 1,870      $ -      $ 2      $ 308      $ 128  
  

Foreign currency swaps

      45        -        9        -        15  

Cash flow hedges

   

Interest rate swaps

      8,116        -        -        896        283  
  

Foreign currency swaps

      1,549        78        45        295        268  
  

Foreign currency forwards

      132        -        -        -        3  
  

Interest rate treasury locks

      880        -        -        58        -  
  

Equity total return swaps

      36        -        -        9        -  
     

 

 

  

Total Derivatives in Effective Hedge Accounting Relationships

        $ 12,628      $ 78      $ 56      $ 1,566      $ 697  
     

 

 

  

Other Hedging Relationships

               
  

Interest rate swaps

        $ 121,799      $ 8,284      $ 4,041      $ 8,284      $ 4,041  
  

Interest rate treasury locks

      10,728        630        13        630        13  
  

Interest rate options

      8,014        247        -        247        -  
  

Interest rate futures

      7,453        -        -        -        -  
  

Foreign currency swaps

      322        57        13        57        13  
  

Foreign currency forwards

      535        2        5        2        5  
  

Foreign currency futures

      991        -        -        -        -  
  

Equity total return swaps

      100        20        -        20        -  
  

Equity index options

      4,113        319        1        319        1  
  

Equity index futures

      5,372        -        -        -        -  
  

Credit default swaps

      -        -        -        -        -  
     

 

 

  

Total Derivatives in Other Hedging Relationships

        $ 159,427      $ 9,559      $ 4,073      $ 9,559      $ 4,073  
     

 

 

  

Replication Synthetic Asset Transactions

               
  

Interest rate swaps

        $ 3,135      $ -      $ -      $ 98      $ 102  
  

Credit default swaps

      30        -        -        -        -  
     

 

 

  

Total Derivatives in Replication Synthetic Asset Transactions

        $ 3,165      $ -      $ -      $ 98      $ 102  
     

 

 

  

Total Derivatives

        $    175,220      $    9,637      $    4,129      $    11,223      $    4,872  
     

 

 

  

Hedging Relationships

The Company generally does not enter into derivative contracts for speculative purposes. In certain circumstances, these hedges also meet the requirements for hedge accounting and are reported in a manner consistent with the hedged asset or liability. For the years ended December 31, 2018, 2017 and 2016, respectively, the Company recorded unrealized gains (losses) of $231 million, $402 million, and $436 million, respectively, related to derivatives that no longer qualify for hedge accounting.

Fair Value Hedges. The Company uses interest rate swaps to manage its exposure to changes in fair value of fixed-rate financial instruments caused by changes in interest rates. The Company also uses cross currency swaps to manage its exposure to foreign exchange rate fluctuations and interest rate fluctuations.

Cash Flow Hedges. The Company uses interest rate swaps and interest rate treasury locks to hedge the variability in cash flows from variable rate financial instruments and forecasted transactions. The Company also uses cross currency swaps and forward agreements to hedge currency exposure on foreign currency financial instruments and foreign currency denominated

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

6. Derivatives - (continued)

 

expenses, respectively. Total return swaps are used to hedge the variability in cash flows associated with certain stock-based compensation awards. Inflation swaps are used to reduce inflation risk generated from inflation-indexed liabilities.

For the year ended December 31, 2018, all of the Company’s hedged forecast transactions qualified as cash flow hedges and no cash flow hedges were discontinued because it was probable that the original forecasted transactions would occur by the end of the originally specified time period documented at inception of the hedging relationship.

The maximum time frame for which variable cash flows are hedged is 28 years.

Derivatives Not Designated as Hedging Instruments or RSAT Relationships. The Company enters into interest rate swap agreements, cancelable interest rate swap agreements, and interest rate futures contracts to manage interest rate risk, total return swap agreements to manage equity risk, and CDS to manage credit risk. The Company also uses interest rate treasury locks and interest rate floor agreements to manage exposure to interest rates without designating the derivatives as hedging instruments. Interest rate floor agreements hedge the interest rate risk associated with minimum interest rate guarantees in certain life insurance and annuity businesses.

The Company offers certain variable annuity products with a guaranteed minimum withdrawal benefit (“GMWB”) and guaranteed minimum death benefit (“GMDB”). These guarantees are effectively an embedded option on the basket of mutual funds offered to contract holders. The Company manages a hedging program to reduce its exposure to certain contracts with the GMWB and GMDB guarantees. This dynamic hedging program uses interest rate swap agreements, equity index futures (including but not limited to the Dow Jones Industrial, Standard & Poor’s 500, Russell 2000, and Dow Jones Euro Stoxx 50 indices), currency futures, total return swaps, equity index options, swaptions and U.S. Treasury futures to match the sensitivities of the GMWB and GMDB liabilities to the market risk factors.

The Company also has a macro equity risk hedging program using equity futures and interest rate swaps, as well as equity index options. This program is designed to reduce the Company’s overall exposure to public equity markets arising from several sources including, but not limited to, variable annuity guarantees not dynamically hedged, separate account fees not associated with guarantees, and Company equity holdings.

The Company uses foreign currency swaps and foreign currency forwards to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies.

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

6. Derivatives - (continued)

 

For the years ended December 31, 2018, 2017 and 2016 net gains and losses related to derivatives in other hedging relationships were recognized by the Company, and the components were recorded in net unrealized and net realized gains (losses) as follows:

 

     Years ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Other Hedging Relationships

       

Net unrealized capital gain (loss):

       

Interest rate swaps

        $ (193 )    $ (805 )    $ 773  

Interest rate treasury locks

      (417 )      841       (435 ) 

Interest rate options

      (35 )      (73 )      (8 ) 

Interest rate futures

      212       -       -  

Foreign currency swaps

      -       6       (31 ) 

Foreign currency forwards

      6       (11 )      -  

Foreign currency futures

      (11 )      -       -  

Equity total return swaps

      9       3       (4 ) 

Equity index options

      (133 )      102       68  

Equity index futures

      121       -       -  

Credit default swaps

      -       -       -  

Commodity futures

      -       -       -  
  

 

 

  

Total net unrealized capital gain (loss)

        $ (441 )    $ 63     $ 363  
  

 

 

  

Net realized capital gain (loss):

       

Interest rate swaps

        $ (225 )    $    874     $ (490 ) 

Interest rate treasury locks

      43       34          342  

Interest rate options

      (5 )      (3 )      -  

Interest rate futures

      (411 )      273       (23 ) 

Foreign currency swaps

      4       4       3  

Foreign currency forwards

      (16 )      16       24  

Foreign currency futures

         61       (111 )      94  

Equity total return swaps

      (2 )      (9 )      (9 ) 

Equity index options

      49       22       (98 ) 

Equity index futures

      157       (1,104)       (1,007 ) 

Credit default swaps

      -       -       -  

Commodity futures

      -       -       -  
  

 

 

  

Total net realized capital gain (loss)

        $ (345 )    $ (4 )    $ (1,164 ) 
  

 

 

  

Total gain (loss) from derivatives in other hedging relationships

        $ (786 )    $ 59     $ (801 ) 
  

 

 

  

The table above does not include unrealized gains (losses) of ($28) million, $9 million, $11 million and realized gains (losses) of $12 million, $12 million and $6 million for the years ended December 31, 2018, 2017 and 2016, respectively. These gains (losses) represent a portion of equity total return swaps used to hedge restricted share units, but that are no longer in an effective accounting hedge relationship. The gains (losses) are recorded in the General Insurance Expenses line in the Statement of Operations.

The Company also deferred net realized gains (losses) of ($229) million, $872 million, and ($526) million (including ($226) million, $874 million, and ($490) million of gains (losses) for derivatives in other hedging relationships, respectively) related to interest rates for the years ended December 31, 2018, 2017 and 2016, respectively. Deferred net realized gains and losses are reported in IMR and amortized over the remaining period to expiration date.

 

F-33

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

6. Derivatives - (continued)

 

Credit Default Swaps

The Company replicates exposure to specific issuers by selling credit protection via CDS in order to complement its cash bond investing. The Company does not employ leverage in its CDS program and therefore, does not write CDS protection in excess of its government bond holdings.

The following table provides details of the CDS protection sold by type of contract and external agency rating for the underlying reference security, as of December 31, 2018 and 2017, respectively

 

     December 31, 2018      December 31, 2017  
  

 

 

  
     Notional
Amount2		      Fair
Value		      Weighted
average
maturity
(in  years)3		      Notional
Amount2		      Fair
Value		      Weighted
average
maturity
(in  years)3		  
  

 

 

  
     (in millions)  

Single name CDS1

                  

Corporate debt

                  

AAA

        $ -      $ -        -          $ 10      $ -        1  

AA

      -        -        -        10           -           -  

A

      -        -        -        10        -        1  

BBB

      -        -        -        -        -        -  
  

 

 

        

 

 

     

Total CDS protection sold

        $    -      $    -             $    30      $ -     
  

 

 

        

 

 

     
1

The rating agency designations are based on S&P where available followed by Moody’s, Dominion Bond Rating Services (DBRS), and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.

2

Notional amount represents the maximum future payments the Company would have to pay its counterparties assuming a default of the underlying credit and zero recovery on the underlying issuer obligation.

3

The weighted average maturity of the CDS is weighted based on notional amounts.

The Company holds no purchased credit protection at December 31, 2018 and 2017. The average credit rating of the counterparties guaranteeing the underlying credits is A and the weighted average maturity is 0 years.

Credit Risk

The Company’s exposure to loss on derivatives is limited to the amount of any net gains that may have accrued with a particular counterparty. Gross derivative counterparty exposure is measured as the total fair value (including accrued interest) of all outstanding contracts in a gain position excluding any offsetting contracts in negative positions and the impact of collateral on hand. The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to the derivative financial instruments. The current credit exposure of the Company’s derivative contracts is limited to the fair value in excess of the collateral held at the reporting date.

The Company manages its credit risk by entering into transactions with creditworthy counterparties, obtaining collateral where appropriate, and entering into master netting agreements that provide for a netting of payments and receipts with a single counterparty. The Company enters into credit support annexes with its OTC derivative dealers in order to manage its credit exposure to those counterparties. As part of the terms and conditions of those agreements, the pledging and accepting of collateral in connection with the Company’s derivative usage is required. As of December 31, 2018 and 2017, the Company accepted collateral consisting of cash of $1,559 million and $1,973 million, and various securities with a fair value of $3,280 million and $4,360 million, respectively, which is held in separate custodial accounts and not reflected within these financial statements. In addition, the Company has pledged collateral to support both the OTC derivative instruments, exchange traded futures and cleared interest rate swap transactions. For further details regarding pledged collateral see the Investments Note.

Under U.S. regulations, certain interest rate swap agreements and credit default swap agreements are required to be cleared through central clearing houses. These transactions are contractual agreements that require initial and variation margin

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

6. Derivatives - (continued)

 

collateral postings and are settled on a daily basis through a clearing house. As such, they reduce the credit risk exposure in the event of default by a counterparty.

Financing Premiums

The following table presents the Company’s aggregate, non-discounted total premium cost for derivative contracts with financing premiums and the premium cost due in each of the following four years, and thereafter.

 

Fiscal Year

    Derivative Premium
Payments Due		  
     (in millions)  

2018

        $ -  

2019

         66  

2020

      -  

2021

      -  

Thereafter

      -  
  

 

 

  

Total Future Settled Premiums

        $  66  
  

 

 

  

 

     Undiscounted Future
Premium
Commitments		      Derivative Fair  Value
With Premium
Commitments		     Derivative Fair  Value
Excluding Impact of
Future Settled
Premiums		  
            (in millions)        

Prior Year

        $ 40          $    32         $    71  

Current Year

        $    66          $ (48 )        $ 17  

Transactions with Affiliates

The Company has entered into a currency swap agreement with JHFC which was recorded at fair value. JHFC utilizes the currency swap to hedge currency exposure on foreign currency financial instruments. The Company has also entered into currency swap agreements with external counterparties which offset the currency swap agreement with JHFC. As of December 31, 2018 and 2017, the currency swap agreements with JHFC and the external counterparties had offsetting fair values of $266 million and $261 million, respectively.

The Company has entered into equity total return swap agreements with MLI which are recorded at fair value. JHUSA utilizes the equity total return swaps to hedge equity exposure on restricted share units (“RSU”). As of December 31, 2018 and 2017, the equity total return swap agreements with MLI had a fair value of ($14) million and $30 million.

In 2017, the Company repositioned interest rate swaps supporting affiliate reinsurance with John Hancock Reassurance Company Limited. The transaction resulted in a pre-tax gain of $24 million and a post-tax increase to surplus of $16 million, net of amounts transferred to the interest maintenance reserve (IMR) and ceded to the affiliate reinsurer.

7. Fair Value

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy:

 

  •  

Financial Instruments Measured at Fair Value and Reported in the Balance Sheet after Initial Recognition – This category includes assets and liabilities measured at fair value. Financial instruments in this category include bonds and preferred stocks carried at the lower of cost or fair value due to their SVO quality rating, common stocks, derivatives, and separate account assets.

 

  •  

Other Financial Instruments Not Reported at Fair Value After Initial Recognition – This category includes assets and liabilities as follows:

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

Bonds – For bonds, including corporate debt, U.S. Treasury, commercial and residential mortgage-backed securities, asset-backed securities, collateralized debt obligations, issuances by foreign governments, and obligations of state and political subdivisions, fair values are based on quoted market prices when available. When market prices are not available, fair value is generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality (matrix pricing). The significant inputs into these models include, but are not limited to, yield curves, credit risks and spreads, measures of volatility, and prepayment speeds.

Mortgage Loans on Real Estate – The fair value of unimpaired mortgage loans is estimated using discounted cash flows and takes into account the contractual maturities and discount rates, which were based on current market rates for similar maturity ranges and adjusted for risk due to the property type. The fair value of impaired mortgage loans is based on the net of the collateral less estimated cost to obtain and sell. Fair value of commercial mortgages is derived through an internal valuation methodology using both observable and unobservable inputs. Unobservable inputs include credit assumptions and liquidity spread adjustments. Fair value of fixed-rate residential mortgages is determined using the discounted cash flow method. Inputs used for valuation are primarily comprised of prevailing interest rates and prepayment rates, if applicable. Fair value of variable-rate residential mortgages is assumed to be their carrying value.

Cash, Cash Equivalents and Short-Term Investments – The carrying values for cash, cash equivalents, and short-term investments approximate their fair value due to the short-term maturities of these instruments.

Policy Loans – These loans are carried at unpaid principal balances, which approximate their fair values.

Policy Reserves – Policy reserves consist of guaranteed investment contracts. The fair values associated with these financial instruments are determined by projecting cash flows and discounting the cash flows at current corporate rates, defined as U.S. Treasury rates plus MFC’s corporate spread. The fair value attributable to credit risk represents the present value of the spread.

Policyholders’ and Beneficiaries Funds – Includes term certain contracts and supplementary contracts without life contingencies. The fair values associated with the term certain contracts and supplementary contracts without life contingencies are determined by projecting cash flows and discounting the cash flows at current corporate rates, defined as U.S. Treasury rates plus MFC’s corporate spread. The fair value attributable to credit risk represents the present value of the spread. Effective December 31, 2016, fair value disclosure is no longer required for those balances that can be withdrawn by the policyholder at any time without prior notice or penalty. The fair value is the amount estimated to be payable to the policyholder as of the reporting date which is generally the carrying value and provides no additional disclosure value.

Consumer Notes – The fair value of consumer notes is determined by projecting cash flows and using a spread assumption associated with the specific risks in the Signature Note contracts. The spread is calculated by taking the difference between the contractual crediting rate and the yield curve as of the issue date of each Signature Note. The calculated spread is added to the yield curve as of each future valuation date to determine the fair value of the Signature Notes.

Financial Instruments Measured at Fair Value and Reported in the Balance Sheet after Initial Recognition

Valuation Hierarchy

The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

 

  •  

Level 1 – Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date reflecting market transactions. Level 1 assets primarily include exchange traded equity securities and certain separate account assets.

 

F-36

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

  •  

Level 2 – Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, inputs that are observable that are not prices (such as interest rates, credit risks, etc.), and inputs that are derived from or corroborated by observable market data. Most bonds are classified within Level 2. Also, included in the Level 2 category are certain separate account assets and derivative assets and liabilities.

 

  •  

Level 3 – Fair value measurements using significant nonmarket observable inputs. These include valuations for assets and liabilities that are derived using data, some or all of which is not market observable data, including assumptions about risk. Level 3 securities include impaired bonds and less liquid securities, such as structured asset-backed securities, commercial mortgage-backed securities, and other securities that have little or no price transparency.

Determination of Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (not a forced liquidation or distress sale) between market participants at the measurement date, that is, an exit value.

When available, quoted market prices are used to determine fair value. If quoted market prices are not available, fair value is typically based upon alternative valuation techniques such as discounted cash flows, matrix pricing, consensus pricing services and other techniques. Broker quotes are generally used when external public vendor prices are not available.

The Company has a process in place that includes a review of price movements relative to the market, a comparison of prices between vendors, and a comparison to internal matrix pricing which uses predominately external observable data. Judgement is applied in adjusting external observable data for items including liquidity and credit factors.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy:

Bonds

Refer to the previous page for the determination of fair value of bonds. Generally, impaired bonds with a NAIC designation rating of 6 whose cost is greater than its fair value are reported at fair value and are classified within Level 3.

Preferred Stocks

Preferred stocks with active markets are classified within Level 1, as fair values are based on quoted market prices. Preferred stocks not traded in active markets are classified within Level 3.

Common Stocks

Common stocks with active markets are classified within Level 1, as fair values are based on quoted market prices. Common stocks not traded in active markets are classified within Level 3.

Derivatives

The fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for OTC derivatives. The pricing models used are based on market standard valuation methodologies, and the inputs to these models are consistent with what a market participant would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), and volatility. The Company’s derivatives are generally classified within Level 2 given the significant inputs to the pricing models for most OTC derivatives are observable or can be corroborated by observable market data. Inputs that are observable generally include interest rates, foreign currency exchange rates, and interest rate curves. However, certain OTC derivatives may rely on inputs that are significant to the fair value, that are unobservable in the market or cannot be derived principally from or corroborated by observable market data and would be classified within Level 3. Inputs that are unobservable generally include broker quotes, volatilities, and inputs that are outside of the observable portion of the interest rate curve or other relevant market measures. These unobservable inputs may involve significant management judgment or estimation.

Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what market participants would use when pricing such instruments. The credit risk of both the counterparty and the

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

Company are considered in determining the fair value for all OTC derivatives after taking into account the effects of netting agreements and collateral arrangements.

Separate Account Assets and Liabilities

For separate accounts structured as a non-unitized fund, the fair value of separate account assets is based on the fair value of the underlying assets owned by the separate account. For separate accounts structured as a unitized fund, the fair value of the separate account assets is based on the fair value of the underlying funds owned by the separate account. Assets owned by the Company’s separate accounts primarily include: investments in mutual funds, bonds, common stock, short-term investments, real estate, and cash and cash equivalents. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders whose interest in the separate account assets is recorded by the Company as separate account liabilities. Separate account liabilities are set equal to the fair value of separate account assets.

The fair value of fund investments is based upon quoted market prices or reported net asset value (“NAV”). Fund investments that are traded in an active market and have a NAV that the Company can access at the measurement date are classified within Level 1. Level 2 assets consist primarily of bonds which are valued using matrix pricing with independent pricing data.

Separate account assets classified as Level 3 consist primarily of fixed maturity and equity investments in private companies, which own timber and agriculture and carry them at fair value. The values of the timber and agriculture investments are estimated using generally accepted valuation techniques. A comprehensive appraisal is performed shortly after initial purchase and at two or three-year intervals thereafter. Appraisal updates are conducted according to client contracts, generally at one-year or six-month intervals. In the quarters in which an investment is not independently appraised or its valuation updated, the market value is reviewed by management. The valuation of an investment is adjusted only if there has been a significant change in economic circumstances related to the investment since acquisition or the most recent independent valuation and upon the independent appraiser’s review and concurrence with management. Further, these valuations are prepared giving consideration to the income, cost, and sales comparison approaches of estimating asset value. The significant unobservable inputs used in the fair value measurement of the Company’s timberland investments are harvest volumes, timber prices, operating costs and discount rates. Significant changes to any one of these inputs in isolation could result in a significant change to fair value measurement. Holding other factors constant, an increase to either harvest volumes or timber prices would tend to increase the fair value of a timberland investment, while an increase in operating costs or discount rate would have the opposite effect. These investments are classified as Level 3 by the companies owning them, and therefore the equity investments in these companies are considered to be Level 3 by the Company.

 

F-38

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

The following table presents the Company’s assets and liabilities that are measured and reported at fair value in the Balance Sheets after initial recognition by fair value hierarchy level:

 

     December 31, 2018  
    

Carrying

Value

      Total Fair
Value		      Level 1      Level 2      Level 3      Net Asset
Value
(NAV)		  
  

 

 

  
     (in millions)  

Assets:

                  

Bond with NAIC 6 rating:

                  

Industrial and misc

        $ 31      $ 31      $ -      $ 25      $ 6      $ -  

Loan-backed and structured securities

      -        -        -        -        -        -  
  

 

 

  

Total bonds with NAIC 6 rating

      31        31        -        25        6        -  

Preferred stocks:

                  

Industrial and misc

      3        3        -        -        3        -  
  

 

 

  

Total preferred stocks

      3        3        -        -        3        -  

Common stocks:

                  

Industrial and misc

      918        918        807        -        111        -  
  

 

 

  

Total common stocks

      918        918        807        -        111        -  

Derivatives:

                  

Interest rate swaps

      7,336        7,336        -        7,336        -        -  

Interest rate treasury locks

      277        277        -        12        265        -  

Interest rate options

      230        230        -        91        139        -  

Interest rate futures

      -        -        -        -        -        -  

Foreign currency swaps

      341        341        -        341        -        -  

Foreign currency forwards

      19        19        -        19        -        -  

Foreign currency futures

      -        -        -        -        -        -  

Equity total return swaps

      11        11        -        -        11        -  

Equity index options

      236        236        -        236        -        -  

Equity index futures

      -        -        -        -        -        -  

Credit default swaps

      -        -        -        -        -        -  
  

 

 

  

Total derivatives

      8,450        8,450        -        8,035        415        -  

Assets held in separate accounts

      124,131        124,131        119,774        2,553        1,804        -  
  

 

 

  

Total assets

        $ 133,533      $ 133,533      $ 120,581      $ 10,613      $ 2,339      $ -  
  

 

 

  

Liabilities:

                  

Derivatives:

                  

Interest rate swaps

        $ 3,287      $ 3,287      $ -      $ 3,232      $ 55      $ -  

Interest rate treasury locks

      77        77        -        17        60        -  

Interest rate options

      -        -        -        -        -        -  

Interest rate futures

      -        -        -        -        -        -  

Foreign currency swaps

      269        269        -        269        -        -  

Foreign currency forwards

      14        14        -        14        -        -  

Foreign currency futures

      -        -        -        -        -        -  

Equity total return swaps

      10        10        -        -        10        -  

Equity index options

      59        59        -        59        -        -  

Equity index futures

      -        -        -        -        -        -  

Credit default swaps

      -        -        -        -        -        -  
  

 

 

  

Total derivatives

      3,716        3,716        -        3,591        125        -  

Liabilities held in separate accounts

      124,131        124,131        119,774        2,553        1,804        -  
  

 

 

  

Total liabilities

        $    127,847      $    127,847      $    119,774      $    6,144      $    1,929      $    -  
  

 

 

  

 

F-39

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

     December 31, 2017  
    

Carrying

Value

      Total Fair
Value		      Level 1      Level 2      Level 3      Net Asset
Value
(NAV)		  
  

 

 

  
     (in millions)  

Assets:

                  

Bond with NAIC 6 rating:

                  

Industrial and misc

        $ 22      $ 22      $ -      $ 12      $ 10      $ -  

Loan-backed and structured securities

      6        6        -        -        6        -  
  

 

 

  

Total bonds with NAIC 6 rating

      28        28        -        12        16        -  

Preferred stocks:

                  

Industrial and misc

      -        -        -        -        -        -  
  

 

 

  

Total preferred stocks

      -        -        -        -        -        -  

Common stocks:

                  

Industrial and misc

      1,354        1,354        1,220        -        134        -  
  

 

 

  

Total common stocks

      1,354        1,354        1,220        -        134        -  

Derivatives:

                  

Interest rate swaps

      8,284        8,284        -        8,284        -        -  

Interest rate treasury locks

      630        630        -        61        569        -  

Interest rate options

      247        247        -        67        180        -  

Interest rate futures

      -        -        -        -        -        -  

Foreign currency swaps

      57        57        -        57        -        -  

Foreign currency forwards

      2        2        -        2        -        -  

Foreign currency futures

      -        -        -        -        -        -  

Equity total return swaps

      20        20        -        -        20        -  

Equity index options

      319        319        -        319        -        -  

Equity index futures

      -        -        -        -        -        -  

Credit default swaps

      -        -        -        -        -        -  
  

 

 

  

Total derivatives

      9,559        9,559        -        8,790        769        -  

Assets held in separate accounts

      141,167        141,167        136,373        2,950        1,844        -  
  

 

 

  

Total assets

        $ 152,108      $ 152,108      $ 137,593      $    11,752      $ 2,763      $ -  
  

 

 

  

Liabilities:

                  

Derivatives:

                  

Interest rate swaps

        $ 4,041      $ 4,041      $ -      $ 4,001      $ 40      $ -  

Interest rate treasury locks

      13        13        -        12        1        -  

Interest rate options

      -        -        -        -        -        -  

Interest rate futures

      -        -        -        -        -        -  

Foreign currency swaps

      13        13        -        13        -        -  

Foreign currency forwards

      5        5        -        5        -        -  

Foreign currency futures

      -        -        -        -        -        -  

Equity total return swaps

      -        -        -        -        -        -  

Equity index options

      1        1        -        1        -        -  

Equity index futures

      -        -        -        -        -        -  

Credit default swaps

      -        -        -        -        -        -  
  

 

 

  

Total derivatives

      4,073        4,073        -        4,032        41        -  

Liabilities held in separate accounts

      141,167        141,167        136,373        2,950        1,844        -  
  

 

 

  

Total liabilities

        $    145,240      $    145,240      $    136,373      $ 6,982      $    1,885      $    -  
  

 

 

  

 

F-40

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

The table below presents the carrying amounts and fair value by fair value hierarchy level for certain assets and liabilities that are not reported at fair value in the Balance Sheets:

 

     December 31, 2018  
     Carrying
Value		      Total Fair
Value		      Level 1      Level 2      Level 3  
  

 

 

  
     (in millions)  

Assets:

               

Bonds (1)

        $ 44,525      $ 43,579      $ -      $ 40,875      $ 2,704  

Preferred stocks

      11        12        -        -        12  

Mortgage loans on real estate

      12,085        12,199        -        -        12,199  

Cash, cash equivalents and short term investments

      2,988        2,988        2,381        607        -  

Policy loans

      2,788        2,788        -        2,788        -  

Derivatives in effective hedge accounting and RSAT relationships

      61        844        -        816        28  
  

 

 

  

Total assets

        $    62,458      $    62,410      $    2,381      $    45,086      $    14,943  
  

 

 

  

Liabilities:

               

Consumer notes

        $ 154      $ 176      $ -      $ -      $ 176  

Borrowed money

      -        -        -        -        -  

Policy reserves

      1,322        1,306        -        -        1,306  

Policyholders’ and beneficiaries funds

      796        961        -        961        -  

Derivatives in effective hedge accounting and RSAT relationships

      3        678        -        438        240  
  

 

 

  

Total liabilities

        $ 2,275      $ 3,121      $ -      $ 1,399      $ 1,722  
  

 

 

  

 

     December 31, 2017  
     Carrying
Value		      Total Fair
Value		      Level 1      Level 2      Level 3  
  

 

 

  
     (in millions)  

Assets:

               

Bonds (1)

        $ 47,942      $ 49,997      $ -      $ 47,017      $ 2,980  

Preferred stocks

      11        14        -        -        14  

Mortgage loans on real estate

      11,900        12,759        -        -        12,759  

Cash, cash equivalents and short term investments

      4,131        4,131        3,065        1,066        -  

Policy loans

      2,726        2,726        -        2,726        -  

Derivatives in effective hedge accounting and RSAT relationships

      78        1,664        -        1,596        68  
  

 

 

  

Total assets

        $    66,788      $    71,291      $    3,065      $    52,405      $    15,821  
  

 

 

  

Liabilities:

               

Consumer notes

        $ 197      $ 226      $ -      $ -      $ 226  

Borrowed money

      -        -        -        -        -  

Policy reserves

      1,364        1,354        -        -        1,354  

Policyholders’ and beneficiaries funds

      937        1,136        -        1,136        -  

Derivatives in effective hedge accounting and RSAT relationships

      56        799        -        618        181  
  

 

 

  

Total liabilities

        $ 2,554      $ 3,515      $ -      $ 1,754      $ 1,761  
  

 

 

  
(1)

Bonds are carried at amortized cost unless they have NAIC designation rating of 6. Fair value of bonds exclude leveraged leases of $2,439 million and $2,415 million at December 31, 2018 and 2017, respectively. The Company calculates the carrying value by accruing income at its expected internal rate of return.

 

F-41

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

Transfers of Level 1 and Level 2 Assets and Liabilities

The Company’s policy is to record transfers of assets and liabilities between Level 1 and Level 2 at their fair values as of the end of each reporting period, consistent with the date of the determination of fair value. Assets are transferred out of Level 1 when they are no longer transacted with sufficient frequency and volume in an active market. During the years ended December 31, 2018 and 2017, the Company did not have any transfers from Level 1 to Level 2. Conversely, assets are transferred from Level 2 to Level 1 when transaction volume and frequency are indicative of an active market. The Company did not transfer assets from Level 2 to Level 1 during the years ended December 31, 2018 and 2017.

 

F-42

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

Level 3 Financial Instruments

The changes in Level 3 financial instruments measured and reported at fair value for the years ended December 31, 2018, 2017 and 2016, are summarized as follows:

 

    

Balance at
January 1,
2018

      Net realized/unrealized
gains (losses) included
in:		    

Amounts
credited

to separate
account
liabilities
(2)

     

Purchases

     

Issuances

     

Sales

    

Settlements

     Transfers    

Balance at
December 31,

2018

  
     Net
income
(1)		      Surplus     Into
Level 3
(3)		      Out of
Level 3
(3)		  
  

 

 

  
     (in millions)  

Bonds with NAIC 6 rating:

                             

Impaired corporate bonds

        $ 10      $ -      $ -     $ -      $ -      $ -      $ (1 )    $ -     $ -      $ (3 )    $ 6  

Impaired mortgage-backed and asset-backed securities

      6        1        -           -        -            -        (7 )      -       -        -       -  
  

 

 

  

Total bonds with NAIC 6 rating

      16        1        -       -        -        -        (8 )      -       -        (3 )      6  

Preferred stocks:

                             

Industrial and misc

      -        -        -       -        3        -               -         -       -        -       3  
  

 

 

  

Total preferred stocks

      -        -        -       -        3        -        -       -       -           -       3  

Common stocks:

                             

Industrial and misc

      134        44        3       -        4        -        (76 )      -       2        -       111  
  

 

 

  

Total common stocks

      134        44              3       -        4        -        (76 )      -       2        -       111  

Net derivatives

      728        -        (389 )      -        8        -        -       (46 )      -        (11 )      290  

Separate account assets/liabilities

      1,844        133        -       -          42        -        (209 )      -       3        (9 )      1,804  
  

 

 

  

Total

        $ 2,722      $   178      $ (386 )    $ -      $ 57      $ -      $ (293 )    $ (46 )    $    5      $ (23 )    $    2,214  
  

 

 

  

 

F-43

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

    

Balance at
January 1,
2017

      Net realized/unrealized
gains (losses) included
in:		    

Amounts
credited

to
separate
account
liabilities
(2)

     

Purchases

     

Issuances

     

Sales

    

Settlements

     Transfers    

Balance at
December 31,
2017

  
     Net
income
(1)		     Surplus     Into
Level 3
(3)		      Out of
Level 3
(3)		  
  

 

 

  
     (in millions)  

Bonds with NAIC 6 rating:

                            

Impaired corporate bonds

        $ 17      $ (1 )    $ 1     $ -      $ 3      $ -      $ (7 )    $ -     $ -      $ (3 )    $ 10  

Impaired mortgage-backed and asset-backed securities

      7        1       -       -        -        -        (2 )      -       -        -       6  
  

 

 

  

Total bonds with NAIC 6 rating

      24        -       1       -        3        -        (9 )      -       -        (3 )      16  

Preferred stocks:

                            

Industrial and misc

      -        -       -       -        -        -        -       -       -        -       -  
  

 

 

  

Total preferred stocks

      -        -       -       -        -        -        -       -       -        -       -  

Common stocks:

                            

Industrial and misc

      169        49       (24 )      -        8        -        (68 )      -       -        -       134  
  

 

 

  

Total common stocks

      169        49       (24 )      -        8        -        (68 )      -       -        -       134  

Net derivatives

      86        -       758       -        16        -        -       (59 )      -        (73 )      728  

Separate account assets/liabilities

      1,896        83       -       -        34        -        (164 )      -         6        (11 )      1,844  
  

 

 

  

Total

        $   2,175      $ 132     $ 735     $ -      $ 61      $ -      $ (241 )    $ (59 )    $ 6      $ (87 )    $ 2,722  
  

 

 

  

 

F-44

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

    

Balance at
January 1,
2016

      Net realized/unrealized
gains (losses) included
in:		    

Amounts
credited
to
separate
account
liabilities
(2)

     

Purchases

     

Issuances

     

Sales

    

Settlements

      Transfers    

Balance at
December 31,
2016

  
     Net
income
(1)		     Surplus      Into
Level 3
(3)		      Out of
Level 3
(3)		  
  

 

 

  
     (in millions)  

Bonds with NAIC 6 rating:

                             

Impaired corporate bonds

        $ 29      $ 1     $ (1 )    $ -      $ 1      $ -      $ (17 )    $ -      $ 4      $ -     $ 17  

Impaired mortgage-backed and asset-backed securities

      7        1       -       -        -        -        (1 )      -        -        -       7  
  

 

 

  

Total bonds with NAIC 6 rating

      36        2       (1 )      -        1        -        (18 )      -        4        -       24  

Preferred stocks:

                             

Industrial and misc

      -        -       -       -        -        -                -       -        -        -       -  
  

 

 

  

Total preferred stocks

      -        -               -       -        -        -        -       -        -        -       -  

Common stocks:

                             

Industrial and misc

      110        (1 )      37         -          25        -        (2 )      -        -        -       169  
  

 

 

  

Total common stocks

      110        (1 )      37       -        25        -        (2 )      -        -              -       169  

Net derivatives

      388        -       (407 )      -        152        -        -       -        -        (47 )      86  

Separate account assets/liabilities

        1,965          84       -       -        46        -        (234 )      -          11        24         1,896  
  

 

 

  

Total

        $ 2,499      $ 85     $ (371 )    $ -      $ 224      $ -      $ (254 )    $ -      $ 15      $ (23 )    $ 2,175  
  

 

 

  

 

(1)

This amount is included in net realized capital gains (losses) on the Statements of Operations.

(2)

Changes in the fair value of separate account assets are credited directly to separate account liabilities in accordance with NAIC SAP and are not reflected in income.

(3)

For financial instruments that are transferred into and/or out of Level 3, the Company uses the fair value of the instruments at the beginning of the reporting period.

 

F-45

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

7. Fair Value - (continued)

 

The transfers into Level 3 primarily result from securities that were impaired during the year or securities where a lack of observable market data (versus the previous year) resulted in reclassifying instruments into Level 3. The transfers out of Level 3 primarily result from observable market data becoming available for that instrument, thus eliminating the need to extrapolate market data beyond observable points. Additionally, securities carried at fair value at the beginning of the period but carried at amortized cost at the end of the period due to rating change or change in fair value relative to amortized cost, are included in transfers out of Level 3. Conversely, any securities carried at amortized cost at the beginning of the period and carried at fair value at the end of the year due to SVO rating change or change in fair value relative to amortized cost, are included into transfers into Level 3.

8. Reinsurance

Certain premiums and benefits are assumed from or ceded to affiliate and other insurance companies under various reinsurance agreements. The Company entered into these reinsurance agreements to shift underlying risk on certain of its products, and to improve cash flow and statutory capital. The ceded reinsurance agreements provide the Company with increased capacity to write larger risks and maintain its exposure to loss within its capital resources.

Total reinsurance amounts included in the Company’s accompanying statutory-basis financial statements were as follows:

 

     Years ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Premiums earned

       

Direct

        $    20,067     $    20,392     $ 19,809  

Assumed

      603       605       872  

Ceded

      (14,854 )      (2,711 )      (7,454 ) 
  

 

 

  

Net

        $ 5,816     $ 18,286     $    13,227  
  

 

 

  

Benefits to policyholders ceded

        $ (15,881 )    $ (16,741 )    $ (15,271 ) 

Reserve amounts ceded to reinsurers not authorized in the State of Michigan are mostly covered by funds withheld assets, letters of credit or trust agreements. Amounts payable or recoverable for reinsurance on policy and contract liabilities are not subject to periodic or maximum limits. At December 31, 2018, any material recoveries were collateralized or settled by the assuming company.

Neither the Company nor any of its related parties control, directly or indirectly, any external reinsurers with whom the Company conducts business. No policies issued by the Company have been reinsured with a foreign company, which is controlled, either directly or indirectly, by a party not primarily engaged in the business of insurance. The Company does not have any reinsurance agreements in effect under which the reinsurer may unilaterally cancel the agreement. At December 31, 2018, there were no reinsurance agreements in effect such that the amount of losses paid or accrued through the statement date may result in a payment to the reinsurer of amounts which, in aggregate and allowing for offset of mutual credits from other reinsurance agreements with the same reinsurer, exceed the total direct premium collected under the reinsured policies.

As of December 31, 2018, if all reinsurance agreements were cancelled the estimated aggregate reduction in unassigned surplus is $5,586 million.

 

F-46

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

8. Reinsurance - (continued)

 

Non-Affiliated Reinsurance

The table below consists of the impact of the New York Life (“NYL”) Agreements:

 

     Years ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Premiums ceded

        $ (219 )        $ (224 )        $ (264 ) 

Premiums assumed

      88       91       106  

Benefits ceded

      (594 )      (636 )      (615 ) 

Benefits assumed

      238       254       246  

Other reinsurance receivable (payable)

      -       (1 )      (2 ) 

Funds held by or deposited with reinsured companies

         3,183          3,316          3,483  

The JHLICO closed block was established upon the demutualization of JHLICO for those designated participating policies that were in-force on February 1, 2000.

Effective July 1, 2015, the Company entered into coinsurance reinsurance agreements with NYL to cede 100% quota share (“QS”) of the Company’s JHLICO Closed Block policies (“NYL 100% Coinsurance”). In addition, NYL agreed to retrocede 40% QS of the same policy risks back to the Company under a coinsurance funds withheld (“FWH”) agreement (“NYL 40% FWH Retrocession”). Collectively, these agreements are known as the NYL Agreements. The NYL 100% Coinsurance keeps the assets supporting the JHLICO Closed Block together in NYL, and the NYL 40% FWH Retrocession adjusts the net reinsurance to NYL to 60% of the JHLICO Closed Block policies at risk.

In conjunction with the NYL Agreements, the existing 100% coinsurance FWH agreement which retrocedes the JHLICO Closed Block New York business back to the Company from JHNY was recaptured. In addition, the 90% modified coinsurance FWH treaty with MRBL was also recaptured. The recaptures were necessary to complete the NYL Agreements, because the policies under these agreements are the same policies at risk under the NYL Agreements.

The table below consists of the impact of the 2018 Reinsurance Group of America (“RGA”) Agreement:

 

     Year ended
December  31,		  
     2018  
  

 

 

  
     (in millions)  

Premiums ceded, net

        $ (2,790 ) 

Benefits ceded, net

      (134 ) 

Other reinsurance receivable

         24  

Other amounts payable on reinsurance

      -  

Effective July 1, 2018, the Company entered into a coinsurance agreement with RGA to cede 100% quota share (“QS”) of a significant block of individual payout annuities. The transaction was structured such that the Company transferred the policy liabilities of $2,520 million and related invested assets of $2,829 million. The Company incurred a pre-tax loss of $72 million net of realized capital gains, including a ceding commission paid of $33 million, and a decrease of $43 million to statutory surplus. Under the terms of the agreement, the Company will maintain responsibility for servicing the policies.

 

F-47

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

8. Reinsurance - (continued)

 

The table below consists of the impact of the 2012 RGA Agreement:

 

     Years ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Premiums ceded, net

        $ (2 )        $ (3 )        $ (392 ) 

Benefits ceded, net

      (407 )      (418 )      (467 ) 

Other reinsurance receivable

         72          68          73  

Other amounts payable on reinsurance

      -       -       -  

Effective April 1, 2012, the Company entered into a coinsurance agreement with RGA to cede its fixed deferred annuities at 90% quota share (“QS”). Subsequently, the treaty increased to 100% QS effective February 29, 2016. The transaction was structured such that the Company transferred the actuarial liabilities and related invested assets. Under the terms of the agreement, the Company will maintain responsibility for servicing the policies.

The table below consists of the impact of the Jackson National Life Insurance Company (“Jackson’) Agreement:

 

     Year ended
December  31,		  
     2018  
  

 

 

  
     (in millions)  

Premiums ceded, net

        $ (5,317 ) 

Benefits ceded, net

      (134 ) 

Funds held by or deposited with reinsured companies

      -  

Other reinsurance receivable

         20  

Other amounts payable on reinsurance

      -  

Effective October 1, 2018, the Company entered into 100% quota share coinsurance agreement with Jackson, a wholly-owned subsidiary of Prudential plc, to reinsure a block of legacy group pay-out annuities. The transaction was structured such that the Company transferred the policy liabilities of $4,292 million and related invested assets of $5,400 million. The Company incurred a pre-tax loss of $914 million net of realized capital gains, including a ceding commission paid of $222 million, and a decrease of $699 million to statutory surplus. Under the terms of the agreement, the Company will maintain responsibility for servicing the policies.

 

F-48

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

8. Reinsurance - (continued)

 

Affiliated Reinsurance

The table and commentary below consist of the impact of the reinsurance agreements with an affiliate, JHNY:

 

     Years ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Premiums ceded, net

        $ (167 )        $ (177 )        $ (183 ) 

Benefits ceded, net

      (408 )      (424 )      (427 ) 

Funds held by or deposited with reinsured companies

      -       -       -  

Other reinsurance receivable

      39       46       41  

Other amounts payable on reinsurance

      5       4       9  

Treaty settlement received (paid)*

         208          227          246  
*

Treaty settlement consisted primarily of ceded investment income, ceded benefit payments and ceded statutory reserves.

On January 1, 2010, the assets supporting the policyholders who reside in the state of New York (“NY business”) were transferred to JHNY from the Company. The transfer included participating traditional life insurance, variable universal life insurance, universal life insurance, fixed deferred and immediate annuities, participating pension contracts, and variable annuities. The NY business was transferred using assumption reinsurance, modified coinsurance and coinsurance with cut-through provisions.

The NY business related to participating traditional life insurance policies was transferred from JHUSA to JHNY under a coinsurance agreement and was immediately retroceded back to JHUSA using a coinsurance FWH agreement. JHNY retained the invested assets supporting this block of business. As previously noted, the coinsurance FWH agreement was recaptured effective July 1, 2015. The NY business related to variable universal life was reinsured through coinsurance and modified coinsurance. The NY business related to universal life was transferred from the Company to JHNY under coinsurance agreements.

The NY business related to a majority of the fixed deferred annuity business was transferred from the Company to JHNY under an assumption reinsurance agreement. The NY business related to variable annuities and some participating pension contracts where assets were held in separate accounts were reinsured through modified coinsurance. The NY business related to fixed deferred and immediate annuities and participating pension contracts was transferred from the Company to JHNY under a coinsurance agreement.

 

F-49

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

8. Reinsurance - (continued)

 

The table and commentary below consist of the impact of the reinsurance agreements with an affiliate, JHRECO:

 

     Years ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Premiums ceded

        $ (501 )        $ (256 )        $ (517 ) 

Premiums ceded, impact of treaty recaptured

      -       3,718       -  

Benefits ceded

      (573 )      (782 )      (836 ) 

Other reinsurance receivable

      13       2       -  

Other amounts payable on reinsurance

      -       -       24  

Funds withheld from reinsured companies

         7,131          7,048       -  

Funds withheld from unauthorized reinsurers

      -       -          7,236  

Treaty settlement received (paid)*

      20       (8 )      (594 ) 
*

Treaty settlement consisted primarily of ceded investment income, ceded benefit payments and ceded statutory reserves.

The Company also reinsures a portion of the risk related to certain annuity policies. The reinsurance agreement is written on a modified coinsurance basis where the assets supporting the reinsured policies remain invested with the Company. On October 1, 2017, the Company recaptured the payout annuity policies with JHRECO. The recapture resulted in pre-tax income of $708 million and an increase in surplus, net of tax, of $460 million.

The Company reinsures a large portion of the Long-Term Care (“LTC”) risk under a single accounting and capital regime, which helps to manage JHUSA’s overall risk profile and reduce strain on statutory surplus. JHUSA’s indirect parent company, MFC, is regulated on a global basis by the Canadian insurance regulator, The Office of the Superintendent of Financial Institution (“OSFI”), and reports its results on a consolidated International Financial Reporting Standards (“IFRS”) basis. As such, the agreement has no impact on the parent company financial results.

JHRECO does not retrocede any risks to a third party or affiliates. The risks assumed by JHRECO are solely the responsibility of JHRECO, but they are also retained within the parent company group. Reserve credits taken were $9,038 million and $8,644 million at December 31, 2018 and 2017, respectively. On December 31, 2017, JHRECO changed its domiciliary jurisdiction from Bermuda to the state of Michigan. As a result of the re-domestication of JHRECO, collateral was no longer required as of December 31, 2017. Total amount of funds withheld (including capital) on behalf of the captive reinsurer that back the long-term care liabilities was $7,131 million and $7,048 million at December 31, 2018 and 2017, respectively.

 

F-50

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

8. Reinsurance - (continued)

 

The available and required capital in the table below represent JHRECO’s capital position on a NAIC basis at December 31, 2018 and 2017.

 

     Years ended December 31,  
     2018     2017  
  

 

 

  
     (in millions)  

Available Capital

        $ 2,085         $ 1,884  

Required Capital

        $ 323         $ 262  

RBC Ratio

         646 %         718 % 

JHUSA’s Authorized Control Level (“ACL”) Risk Based capital impact on recapture of the LTC reinsurance agreement at December 31, 2018 and 2017 is as follows:

 

     Available
Capital		      Required
Capital		      RBC
Ratio		  
  

 

 

  
             (in millions)  

As reported at December 31, 2018

        $ 11,404          $ 1,425          800 % 

Impact of JHRECO LTC Recapture

      470        232        -83 % 
  

 

 

  

Capital Gross of JHRECO LTC Cession

        $   11,874          $ 1,657          717 % 
  

 

 

  
     Available
Capital		      Required
Capital		      RBC
Ratio		  
  

 

 

  
     (in millions)  

As reported at December 31, 2017

        $ 10,761          $ 1,266          850 % 

Impact of JHRECO LTC Recapture

      854        189        -52 % 
  

 

 

  

Capital Gross of JHRECO LTC Cession

        $ 11,615          $   1,455          798 % 
  

 

 

  

The table and commentary below consist of the impact of the reinsurance agreements with an affiliate, MRBL:

 

     Years ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Premiums ceded

        $ (3,763 )        $ (3,320 )        $ (3,978 ) 

Benefits ceded

      (10,700 )      (11,653 )      (10,494 ) 

Other reinsurance receivable

      185       25       -  

Other amounts payable on reinsurance

         660          389          605  

Funds withheld from unauthorized reinsurers

      7       -       227  

Treaty settlement received (paid)*

      178       480       (142 ) 
*

Treaty settlement consisted primarily of ceded investment income related to non-qualifying hedging strategies and changes in the modified coinsurance and coinsurance reserves.

 

F-51

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

8. Reinsurance - (continued)

 

The Company reinsures 87% of certain group annuity contracts in-force with MRBL. The reinsurance agreement covers all contracts, excluding the guaranteed benefit rider.

The Company reinsures 90% of a significant block of variable annuity contracts in-force with MRBL. All substantial risks, including all guaranteed benefits (GMDB, Guaranteed Minimum Income Benefit (“GMIB”), and GMWB), related to certain specified policies not already reinsured to third parties, are reinsured under the agreement. The base contracts are reinsured on a modified coinsurance basis, while the guaranteed benefit reinsurance coverage is apportioned in accordance with the reinsurance agreement provisions between modified coinsurance and coinsurance FWH. The assets supporting the reinsured policies remain invested with the Company. Since the inception of the treaty in 2008, several amendments have been enacted to refine certain aspects of the treaty. The net MRBL reinsurance recoverable includes the impact of ongoing reinsurance cash flows and is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies with changes to ceded reserves and cost of reinsurance recognized as a component of benefits to policyholders on the Statements of Operations.

The Company’s indirect parent company, MFC, is regulated on a global basis by the Canadian insurance regulator, OSFI, and reports on a consolidated IFRS basis. The Company utilizes a dynamic hedging program to manage risks on an economic basis. The IFRS accounting for these derivatives aligns with MFC’s market-based reserving regime. The US statutory accounting and reserving framework does not provide appropriate alignment of economic risk management strategies (hedging) and associated reserve methodologies. The treaty with MRBL provides a mechanism to allow management of the majority of the variable annuity risk under a single consolidated reserve and capital regime, rather than managing the block simultaneously under two very diverse frameworks.

As a coinsurance / modified coinsurance treaty, MRBL holds $1,989 million and $1,873 million as a coinsurance reserve and JHUSA holds $420 million and $109 million as a modified coinsurance reserve at December 31, 2018 and 2017, respectively. The IFRS reserves that MRBL holds for variable annuities are similar in concept to AG43. The calculations are a real-world stochastic calculation at CTE(70), based on the guaranteed benefits and fees in isolation rather than the whole contract, including the cash flows generated from the dynamic hedging program and including margins for adverse deviation. The real-world stochastic scenarios are subject to Canadian Institute of Actuaries equity and bond fund return calibration criteria. Reserve credits taken were $7 million and $0 million at December 31, 2018 and 2017, respectively, and there is no supporting collateral.

MRBL does not retrocede any risks to a third party. The risks assumed by MRBL are solely the responsibility of MRBL, but they are also retained within MFC. This transaction has no impact on MFC’s financial statements as it reports its risks on a consolidated basis.

On September 30, 2018, the Company entered into a combination coinsurance and modified coinsurance agreement with MRBL to cede 95% of certain single life and survivorship variable universal life products. The transactions included the transfer from JHUSA of $662 million of policy liabilities. The transactions resulted in a pre-tax gain of $500 million, including a ceding commission received of $500 million, and an increase in surplus of $395 million net of tax, which was deferred and will be amortized over a period of approximately 20 years.

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

8. Reinsurance - (continued)

 

The Company entered into a Stop Loss Reinsurance Agreement with MRBL, effective April 1, 2017, simultaneous with entering into a coinsurance with partial funds withheld agreement with MMRC, as described below.

The table and commentary below consist of the impact of the reinsurance agreements with an affiliate, MRL:

 

     Years ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Premiums ceded

        $ (133 )        $ (255 )        $ (298 ) 

Benefits ceded

      (595 )      (545 )      (468 ) 

Other reinsurance receivable

      -       -          5  

Other amounts payable on reinsurance

      7       7       -  

Funds withheld from unauthorized reinsurers

         329          66       -  

Treaty settlement received (paid)*

      (30 )      (28 )      (74 ) 

 

*

Treaty settlement consisted primarily of ceded investment income, ceded benefit payments and ceded statutory reserves.

The Company entered into a coinsurance/modified coinsurance agreement with an affiliate, MRL, to reinsure 90% of all risks not already reinsured to third parties on various universal life contracts effective December 15, 2000. Subsequent amendments added further UL and some term contracts. The Company amended the agreement during 2014 to simplify treaty administration and to modify the structure of the treaty to a modified coinsurance FWH structure.

The table and commentary below consist of the impact of the reinsurance agreement with an affiliate, JHLH:

 

     Years ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Premiums ceded

        $ (28 )        $ (27 )        $ (28 ) 

Premiums assumed

      -       -          241  

Benefits ceded

      (22 )      (19 )      (10 ) 

Benefits assumed

         19          22       8  

Other reinsurance receivable

      -       -       1  

Other amounts payable on reinsurance

      5       7       -  

Funds withheld from authorized reinsurers

      -       -       3  

Treaty settlement received (paid)*

      (23 )      (28 )      7  

* Treaty settlement consisted primarily of ceded investment income, ceded benefit payments and ceded statutory reserves.

On December 31, 2016, the Company entered into a coinsurance agreement with an affiliate, JHLH, to reinsure 100% of a block of single premium universal life policies. The transaction included the transfer from JHLH of $282 million of invested assets and $241 million in net policy liabilities. The transaction resulted in a pre-tax gain and ceding commission received of $36 million and an increase in surplus of $52 million, net of tax.

 

F-53

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

8. Reinsurance - (continued)

 

The table and commentary below consist of the impact of the reinsurance agreement with an affiliate, MMRC:

 

     Year ended December 31,  
     2018     2017  
  

 

 

  
     (in millions)  

Premiums ceded

        $ (135)         $ (373)  

Premiums assumed

      -       -  

Benefits ceded

      (17)       (14)  

Benefits assumed

      -       -  

Other reinsurance receivable

      -       -  

Other amounts payable on reinsurance

      22       18  

Funds withheld from authorized reinsurers

         102          50  

Treaty settlement received (paid)*

      (68 )      (55 ) 
*

Treaty settlement consisted primarily of ceded investment income, ceded benefit payments and ceded statutory reserves.

Effective April 1, 2017, the Company entered into a coinsurance with partial FWH agreement with an affiliate, MMRC, to reinsure 100% of the Company’s in-force single-life term life insurance policies and related riders, for certain policy years. The transaction included the transfer to MMRC of $284 million in net policy liabilities. Also, the Company recognized $33 million of FWH liabilities. The transactions resulted in a pre-tax gain of $251 million, including a ceding commission received of $252 million, and an increase in surplus of $163 million, net of tax, which was deferred and will be amortized over a period of approximately 15 years. Subsequent amendment added additional term contracts.

The reinsurance agreement with MMRC was entered into to address the surplus strain caused by the excess of XXX NAIC reserves over the VM-20 reserve levels. This transaction was within the scope of Actuarial Guideline 48, the NAIC Term Life and Universal Life with Secondary Guarantees (XXX/AXXX) Credit for Reinsurance Model Regulation (“AG 48”). In accordance with the terms of AG 48, the obligations of MMRC under the reinsurance agreement are supported by a FWH account and a credit-linked note. The FWH account is funded with assets meeting the definition of “Primary Security” under AG 48 and in an amount equal to or in excess of the VM-20 reserve. The credit-linked note is in the amount of the excess of the statutory reserves over the then current “Required Level of Primary Security”.

The Company did not commute any material ceded reinsurance in 2018.

 

F-54

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes

The components of the net deferred tax asset/(liability) are as follows:

 

     December 31, 2018  
     (1)
Ordinary		     (2)
Capital		     (3)
(Col 1 + 2)
Total		  
  

 

 

  
     (in millions)  

(a) Gross deferred tax assets

        $ 1,674     $    67     $ 1,741  

(b) Statutory valuation allowance adjustments

      121       -       121  
  

 

 

  

(c) Adjusted gross deferred tax assets (a - b)

      1,553       67       1,620  

(d) Deferred tax assets nonadmitted

      -       -       -  
  

 

 

  

(e) Subtotal net admitted deferred tax asset (c - d)

         1,553       67       1,620  

(f) Deferred tax liabilities

      1,628       69          1,697  
  

 

 

  

(g) Net admitted deferred tax asset / (net deferred tax liability) (e - f)

        $ (75 )    $ (2 )    $ (77 ) 
  

 

 

  
     December 31, 2017  
     (4)
Ordinary		     (5)
Capital		     (6)
(Col 4 + 5)
Total		  
  

 

 

  
     (in millions)  

(a) Gross deferred tax assets

        $ 2,432     $ 63     $ 2,495  

(b) Statutory valuation allowance adjustments

      121       -       121  
  

 

 

  

(c) Adjusted gross deferred tax assets (a - b)

      2,311       63       2,374  

(d) Deferred tax assets nonadmitted

      -       -       -  
  

 

 

  

(e) Subtotal net admitted deferred tax asset (c - d)

      2,311       63       2,374  

(f) Deferred tax liabilities

      2,289       72       2,361  
  

 

 

  

(g) Net admitted deferred tax asset / (net deferred tax liability) (e - f)

        $ 22     $ (9 )    $ 13  
  

 

 

  
     Change  
     (7)
(Col 1 - 4)
Ordinary		     (8)
(Col 2 - 5)
Capital		     (9)
(Col 7 + 8)
Total		  
  

 

 

  
     (in millions)  

(a) Gross deferred tax assets

        $ (758 )    $ 4     $ (754 ) 

(b) Statutory valuation allowance adjustments

      -       -       -  
  

 

 

  

(c) Adjusted gross deferred tax assets (a - b)

      (758 )      4       (754 ) 

(d) Deferred tax assets nonadmitted

      -       -       -  
  

 

 

  

(e) Subtotal net admitted deferred tax asset (c - d)

      (758 )      4       (754 ) 

(f) Deferred tax liabilities

      (661 )      (3 )      (664 ) 
  

 

 

  

(g) Net admitted deferred tax asset / (net deferred tax liability) (e - f)

        $ (97 )    $ 7     $ (90 ) 
  

 

 

  

The Company has recorded a valuation allowance against specific general business tax credit carryforwards of $121 million for the year ended December 31, 2018. These tax credits were generated by the legacy JHFC group and are subject to the separate return limitation rules. These credits will not expire until 2027, however due to restrictions on the utilization, management believes that it is more likely than not that the Company will not realize the benefit. In assessing the need for a valuation allowance, management considered the future reversal of taxable temporary differences, future taxable income exclusive of reversing temporary differences, taxable income in the carry back period, as well as tax planning strategies. Tax

 

F-55

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

planning strategies were considered to the extent they were both prudent and feasible and if implemented, would result in the realization of deferred tax assets.

The amount of adjusted gross deferred tax assets admitted under each component and the resulting increase in deferred tax assets by character are as follows:

 

     December 31, 2018  
     (1)
Ordinary		      (2)
Capital		      (3)
(Col 1 + 2)
Total		  
  

 

 

  
     (in millions)  

2. Admission calculation components SSAP No. 101

         

(a) Federal income taxes paid in prior years recoverable through loss carrybacks.

        $ -      $ 65      $ 65  

(b) Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from 2(a) above) after application of the threshold limitation.

(The lesser of 2(b)1 and 2(b)2 below)

      649        -        649  

1. Adjusted gross deferred tax assets expected to be realized following the Balance Sheet date.

      649        -        649  

2. Adjusted gross deferred tax assets allowed per limitation threshold.

      1,328        -        1,328  

(c) Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from 2(a) and 2(b) above) offset by gross deferred tax liabilities.

      904        2        906  
  

 

 

  

(d) Deferred tax assets admitted as the result of application of SSAP No. 101. Total (2(a) + 2(b) + 2(c))

        $    1,553      $    67      $    1,620  
  

 

 

  

 

F-56

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

     December 31, 2017  
     (4)
Ordinary		     (5)
Capital		     (6)
(Col 4 + 5)
Total		  
  

 

 

  
     (in millions)  

2. Admission calculation components SSAP No. 101

       

(a) Federal income taxes paid in prior years recoverable through loss carrybacks.

        $ -     $ 53     $ 53  

(b) Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from 2(a) above) after application of the threshold limitation.

(The lesser of 2(b)1 and 2(b)2 below)

      742       -       742  

1. Adjusted gross deferred tax assets expected to be realized following the Balance Sheet date.

      742       -       742  

2. Adjusted gross deferred tax assets allowed per limitation threshold.

      1,212       -       1,212  

(c) Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from 2(a) and 2(b) above) offset by gross deferred tax liabilities.

      1,569       10       1,579  
  

 

 

  

(d) Deferred tax assets admitted as the result of application of SSAP No. 101. Total (2(a) + 2(b) + 2(c))

        $    2,311     $    63     $    2,374  
  

 

 

  
     Change  
     (7)
(Col 1 - 4)
Ordinary		     (8)
(Col 2 - 5)
Capital		     (9)
(Col 7 + 8)
Total		  
  

 

 

  
     (in millions)  

2. Admission calculation components SSAP No. 101

       

(a) Federal income taxes paid in prior years recoverable through loss carrybacks.

        $ -     $ 12     $ 12  

(b) Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from 2(a) above) after application of the threshold limitation.

(The lesser of 2(b)1 and 2(b)2 below)

      (93 )      -       (93 ) 

1. Adjusted gross deferred tax assets expected to be realized following the Balance Sheet date.

      (93 )      -       (93 ) 

2. Adjusted gross deferred tax assets allowed per limitation threshold.

      116       -       116  

(c) Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from 2(a) and 2(b) above) offset by gross deferred tax liabilities.

      (665 )      (8 )      (673 ) 
  

 

 

  

(d) Deferred tax assets admitted as the result of application of SSAP No. 101. Total (2(a) + 2(b) + 2(c))

        $ (758)     $ 4     $ (754)  
  

 

 

  

 

F-57

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

     2018     2017  
  

 

 

  
     (in millions)  

(a) Ratio percentage used to determine recovery period and threshold limitation amount

      800 %      849 % 

(b) Amount of adjusted capital and surplus used to determine recovery period and threshold limitation in 2(b)2 above

        $    8,854     $    8,082  

Impact of tax planning strategies is as follows:

 

     December 31, 2018  
     (1)
Ordinary		     (2)
Capital		  
  

 

 

  
     (in millions)  

(a) Determination of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets by tax character as a percentage.

     

1. Adjusted Gross DTAs Amount From Note 9A1(c)

        $    1,553     $ 67  

2. Percentage of Adjusted Gross DTAs By Tax Character Attributable To The Impact of Tax Planning Strategies

      0 %      0 % 

3. Net Admitted Adjusted Gross DTAs Amount from Note 9A1(e)

        $ 1,553     $ 67  

4. Percentage of Net Admitted Adjusted Gross DTAs by Tax Character Attributable To The Impact of Tax Planning Strategies

      0 %      0 % 
     December 31, 2017  
     (3)
Ordinary		     (4)
Capital		  
  

 

 

  
     (in millions)  

(a) Determination of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets by tax character as a percentage.

     

1. Adjusted Gross DTAs Amount From Note 9A1(c)

        $ 2,311     $ 63  

2. Percentage of Adjusted Gross DTAs By Tax Character Attributable To The Impact of Tax Planning Strategies

      0 %      0 % 

3. Net Admitted Adjusted Gross DTAs Amount from Note 9A1(e)

        $ 2,311     $    63  

4. Percentage of Net Admitted Adjusted Gross DTAs by Tax Character Attributable To The Impact of Tax Planning Strategies

      0 %      0 % 

 

F-58

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

     Change  
     (5)
(Col 1 - 3)
Ordinary		     (6)
(Col 2 - 4)
Capital		  
  

 

 

  
     (in millions)  

(a) Determination of Adjusted Gross Deferred Tax Assets and Net Admitted Deferred Tax Assets by tax character as a percentage.

     

1. Adjusted Gross DTAs Amount From Note 9A1(c)

        $ (758 )    $    4  

2. Percentage of Adjusted Gross DTAs By Tax Character Attributable To The Impact of Tax Planning Strategies

      0 %      0 % 

3. Net Admitted Adjusted Gross DTAs Amount from Note 9A1(e)

        $ (758 )    $ 4  

4. Percentage of Net Admitted Adjusted Gross DTAs by Tax Character Attributable To The Impact of Tax Planning Strategies

         0 %      0 % 

The Company’s tax planning strategies do not include the use of reinsurance.

There are no unrecognized deferred tax liabilities for amounts described in ASC 740-10-25-3.

Current income taxes incurred consist of the following major components:

 

     Years Ended December 31,  
     (1)
2018		     (2)
2017		      (3)
(Col 1 -
2)
Change		  
  

 

 

  
     (in millions)  

1. Current income tax

        

(a) Federal

        $ (725 )    $    446      $ (1,171 ) 

(b) Foreign

      -       -        -  
  

 

 

  

(c) Subtotal

      (725 )      446        (1,171 ) 

(d) Federal income tax on net capital gains

         396       243           153  

(e) Utilization of capital loss carryforwards

      -       -        -  

(f) Other

      -       -        -  
  

 

 

  

(g) Federal and foreign income taxes incurred

        $ (329 )    $ 689      $ (1,018 ) 
  

 

 

  

 

F-59

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows:

 

     December 31,  
     (1)
2018		      (2)
2017		      (3)
(Col 1 - 2)
Change		  
  

 

 

  
     (in millions)  

2. Deferred tax assets:

         

(a) Ordinary:

         

(1) Discounting of unpaid losses

        $ -      $ -      $ -  

(2) Unearned premium reserve

      -        -        -  

(3) Policyholder reserves

      654        1,489        (835 ) 

(4) Investments

      72        88        (16 ) 

(5) Deferred acquisition costs

      412        357        55  

(6) Policyholder dividends accrual

      53        49        4  

(7) Fixed assets

      -        -        -  

(8) Compensation and benefits accrual

      34        28        6  

(9) Pension accrual

      17        16        1  

(10) Receivables - nonadmitted

      54        48        6  

(11) Net operating loss carryforward

      35        -           35  

(12) Tax credit carry-forward

      333        329        4  

(13) Other (including items <5% of total ordinary tax assets)

      10        28        (18 ) 
  

 

 

  

(99) Subtotal

        $    1,674      $    2,432      $ (758 ) 

(b) Statutory valuation allowance adjustment

      121        121        -  

(c) Nonadmitted

      -        -        -  
  

 

 

  

(d) Admitted ordinary deferred tax assets (2(a)(99) - 2(b) - 2(c))

        $ 1,553      $ 2,311      $ (758 ) 

(e) Capital:

         

(1) Investments

        $ 67      $ 63      $ 4  

(2) Net capital loss carryforward

      -        -        -  

(3) Real estate

      -        -        -  

(4) Other (including items <5% of total capital tax assets)

      -        -        -  
  

 

 

  

(99) Subtotal

        $ 67      $ 63      $ 4  

(f) Statutory valuation allowance adjustment

      -        -        -  

(g) Nonadmitted

      -        -        -  
  

 

 

  

(h) Admitted capital deferred tax assets (2(e)(99) - 2(f) - 2(g))

        $ 67      $ 63      $ 4  

(i) Admitted deferred tax assets (2(d)+2(h))

        $ 1,620      $ 2,374      $ (754 ) 

 

F-60

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

3. Deferred tax liabilities:

        

(a) Ordinary:

        

(1) Investments

        $    1,150     $ 1,178      $ (28 ) 

(2) Fixed assets

      18       18        -  

(3) Deferred and uncollected premium

      9       9        -  

(4) Policyholder reserves

      324       934        (610 ) 

(5) Other (including items <5% of total ordinary tax liabilities)

      127       150        (23 ) 
  

 

 

  

(99) Subtotal

        $ 1,628     $ 2,289      $ (661 ) 

(b) Capital:

        

(1) Investments

        $ 69     $ 72      $ (3 ) 

(2) Real estate

      -       -        -  

(3) Other (including items <5% of total capital tax liabilities)

      -       -           -  
  

 

 

  

(99) Subtotal

        $ 69     $ 72      $ (3 ) 
  

 

 

  

(c) Deferred tax liabilities (3(a)(99) + 3(b)(99))

        $ 1,697     $    2,361      $ (664 ) 
  

 

 

  

4. Net deferred tax assets/liabilities (2(i) - 3(c))

        $ (77 )    $ 13      $ (90 ) 
  

 

 

  

The change in net deferred income taxes is comprised of the following:

 

     December 31,  
     2018     2017      Change  
  

 

 

  
     (in millions)  

Total deferred tax assets

        $    1,620     $    2,374      $ (754 ) 

Total deferred tax liabilities

      1,697       2,361        (664 ) 
  

 

 

  

Net deferred tax assets (liabilities)

        $ (77 )    $ 13      $ (90 ) 
  

 

 

     

Tax effect of unrealized gains and losses

              137  

Tax effect of unrealized foreign exchange gains (losses)

           5  

Other

           (215 ) 
       

 

 

  

Change in net deferred income taxes

         $ (17 ) 
       

 

 

  

 

F-61

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

The provision for federal and foreign income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate of 21% for 2018 and 35% for 2017 and 2016 to income before income tax (including realized capital gains). The significant items causing this difference are as follows:

 

     Years Ended December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Ordinary provisions computed at statutory rate

        $ (7 )    $ 962     $ 294  

Net realized capital gains (losses) before IMR at statutory rate

         153       253       (173 ) 

Change in nonadmitted assets

      -       -       -  

Reinsurance

      77       22       (47 ) 

Valuation allowance

      -       -       71  

Tax-exempt income

      1       (22 )      (16 ) 

Nondeductible expenses

      2       1       (1 ) 

Foreign tax expense gross up

      5       8       8  

Amortization of IMR

      (138 )      (68 )      (78 ) 

Tax recorded in surplus

      14       68       (4 ) 

Dividend received deduction

      (159 )      (184 )      (183 ) 

Investment in subsidiaries

      (18 )      (25 )      (25 ) 

Prior year adjustment

      (69 )      (151 )      (54 ) 

Tax credits

      (23 )      (24 )      (26 ) 

Change in tax reserve

      33       4       (200 ) 

Pension

      -       -       -  

Tax rate change

      (185 )      570       -  

Other

      2       1       (1 ) 
  

 

 

  

Total

        $ (312 )    $ 1,415     $ (435 ) 
  

 

 

  

Federal and foreign income taxes incurred

        $ (725 )    $ 446     $ (121 ) 

Capital gains tax

      396       243          496  

Change in net deferred income taxes

      17       726       (810 ) 
  

 

 

  

Total statutory income tax expense (benefit)

        $ (312 )    $    1,415     $ (435 ) 
  

 

 

  

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

As of December 31, 2018, the Company had the following carry forwards:

 

     Origination
Year		      Expiration
Year		      Amount  
  

 

 

  
     (in millions)  

Affordable housing tax credits

      2001        2021          $ 1  
     2002        2022        1  
     2003        2023        1  
     2004        2024        1  
     2005        2025        1  
     2006        2026        2  
     2007        2027        23  
     2008        2028        57  
     2009        2029        54  
     2010        2030        47  
     2011        2031        41  
     2012        2032        32  
     2013        2033        21  
     2014        2034        12  
     2015        2035        5  
     2016        2036        3  
     2017        2037        1  
     2018        2038        -  
        

 

 

  
             $    303  
        

 

 

  

Net Operating Losses

      2008        2023          $ -  
     2009        2024        -  
     2010        2025        -  
     2013        2028        -  
     2014        2029        -  
     2018           35  
        

 

 

  
             $ 35  
        

 

 

  

Foreign Tax Credits

      2006        2016          $ -  
     2007        2017        -  
     2008        2018        -  
     2009        2019        -  
     2010        2020        -  
     2011        2021        -  
     2012        2022        -  
     2013        2023        -  
     2014        2024        -  
     2015        2025        -  
     2016        2026        -  
     2017        2027        -  
     2018        2028        23  
        

 

 

  
             $ 23  
        

 

 

  

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

     Origination
Year		      Expiration
Year		      Amount  
  

 

 

  
     (in millions)  

Other credits

      2000        2020          $ -  
     2001        2021        -  
     2002        2022        -  
     2003        2023        -  
     2004        2024        -  
     2005        2025        -  
     2006        2026        -  
     2007        2027        -  
     2008        2028        -  
     2009        2029        -  
     2010        2030        -  
     2011        2031        -  
     2012        2032        -  
     2013        2033        2  
     2014        2034        2  
     2015        2035        3  
     2016        2036        -  
        

 

 

  
             $    7  
        

 

 

  

With the enactment of the Tax Cuts and Jobs Act on December 22, 2017, the net operating loss carryback provision was repealed effective January 1, 2018. The federal income taxes incurred on capital gains available for recoupment in the event of future net capital losses were $0 million, $323 million and $0 million for the years 2018, 2017 and 2016 respectively.

The Company has no deposits under Section 6603 of the Internal Revenue Code.

The Company is included in the consolidated federal income tax return of JHFC with the following entities:

 

Essex Corporation    John Hancock Insurance Agency Inc.
Farmland Management Services, Inc.    John Hancock Leasing Corp.
Guide Financial, Inc.    John Hancock Life Insurance Company of New York
Hancock Farmland Services, Inc.    John Hancock Life & Health Insurance Company
Hancock Forest Management Inc.    John Hancock Natural Resource Corp.
Hancock Natural Resource Group Inc.    John Hancock Realty Advisors Inc.
JH 575 Rengstorff LLC    John Hancock Realty Mgt. Inc.
JH Hostetler LLC    John Hancock Signature Services Inc.
JH Kearny Mesa 5 LLC    Manulife Holding (USA) LLC
JH Kearny Mesa 7 LLC    Manulife (Michigan) Reassurance Company
JH Kearny Mesa 9 LLC    Manulife Reinsurance (Bermuda) Limited
JH Networking Insurance Agency Inc.    Manulife Reinsurance Limited
JH Ott LLC    Manulife Service Corporation
JH Tulare 8 LLC    MCC Asset Management Inc.
JHFS One Corp.    PT Timber Inc.
John Hancock Assignment Company    Signator Insurance Agency Inc.
John Hancock Financial Corporation    Signator Investors Inc.
John Hancock Financial Network Inc.    The Manufacturers Investment Corporation

In accordance with the income tax sharing agreements in effect for the applicable tax years, the Company’s income tax expense (benefit) is computed as if the Company filed separate federal income tax returns with tax benefits provided for operating losses and tax credits when utilized by the consolidated group. Intercompany settlements of income taxes are made through an increase or reduction to amounts due to or from affiliates. Such settlements occur on a periodic basis in accordance with the tax sharing agreements.

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

Taxes receivable from (payable to) affiliates are ($47) million and ($156) million at December 31, 2018 and 2017, respectively, and are included in other assets or current federal income taxes payable on the Balance Sheets.

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company is under continuous examination by the Internal Revenue Service (“IRS”). Effective for 2010, the Company’s common parent, JHFC, merged into Manulife Holdings (Delaware) LLC (“MHDLLC”) resulting in a new combined group. With respect to the legacy MHDLLC consolidated return group, the IRS audit for tax years through 2009 have been closed. With respect to the legacy JHFC group, the IRS has completed its examinations of tax years 1997 through 2009. On March 30, 2016, the Company and the IRS finalized an agreement for tax years 2002-2009. The agreement applies the U.S. Tax Court’s opinion on the Company’s tax treatment of certain leveraged lease investments pertaining to tax years 1997-2001. There was no material impact to the Company’s financial position or results of operations as a result of the agreement.

In August 2017, the Company received and signed an IRS Revenue Agent Report for tax years 2010-2013. Tax years 2014 and forward are open under the statute of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 

     2018     2017  
  

 

 

  
     (in millions)  

Balance at beginning of year

        $ 60     $ 37  

Additions based on tax positions related to the current year

      2       14  

Payments

      -       -  

Additions for tax positions of prior years

      48       22  

Reductions for tax positions of prior years

      (2 )      (13 ) 
  

 

 

  

Balance at end of year

        $    108     $    60  
  

 

 

  

Included in the balances as of December 31, 2018 and 2017, are $108 million and $75 million, respectively, of unrecognized benefits that, if recognized, would affect the Company’s effective tax rate. Included in the balances as of December 31, 2018 and 2017, are ($1) million and ($16) million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The Company’s liability for unrecognized tax benefits is not expected to materially change in the next twelve months.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense in the Statements of Operations. The Company recognized approximately ($3) million, ($10) million, and ($177) million of interest expense / (benefit) for the years ended December 31, 2018, 2017 and 2016, respectively. The Company had approximately $6 million and $6 million accrued for interest as of December 31, 2018 and 2017, respectively. The Company did not recognize any material penalties for the years ended December 31, 2018, 2017 and 2016.

The Company reported a Repatriation Transition Tax liability in the amount of $1 million for 2017. This amount was fully remitted to the IRS with the filing of the 2017 federal income tax return.

As of December 31, 2017, the Company reported an Alternative Minimum Tax (AMT) Credit carryforward of $485 million, all of which was recorded as a current tax recoverable. The Company expects to recover $243 million of this balance with the filing of its 2018 tax return, while the remaining $242 million is expected to be recovered in 2019 through 2021.

With the enactment of the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017, the Company applied existing guidance to the best available information in the recording of its tax provisions reflected in the 2017 financial statements. In 2018, the Company completed its analysis on the income tax effects of the Act and adjusted its provisional amounts accordingly. The Company updated policy level tax reserves and reflected impacts of $108 million in its temporary differences for Actuarial Liabilities in both deferred tax assets and deferred tax liabilities. The transitional deferred tax liability is being amortized into taxable income over 8 years, in the amount of $13 million per year. In addition, with the completion of the 2017 tax return,

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

9. Federal Income Taxes - (continued)

 

the Company recorded all provision to return adjustments of which ($185) million impacted the effective tax rate related to the revaluation of deferred tax assets and liabilities from 35% to 21%.

10. Capital and Surplus

There are no restrictions placed on the Company’s unassigned surplus other than restrictions on dividend payments described below.

Under Michigan State insurance laws, no insurer may pay any shareholder dividends from any source other than statutory earned surplus without the prior approval of the Director. Dividends to the shareholder that may be paid without prior approval of the Director are limited by the laws of the State of Michigan. Such dividends are permissible if, together with other dividends or distributions made within the preceding 12 months, they do not exceed the greater of 10% of the JHUSA surplus as of December 31 of the preceding year, or the net gain from operations excluding realized capital gains and (losses) for the 12 month period ending December 31 of the immediately preceding year. For the years ended December 31, 2018, 2017 and 2016, the Company paid ordinary dividends of $600 million, $807 million and $0 million and extraordinary dividends of $0 million, $93 million, and $0 million to its parent company MIC, respectively.

Life/health insurance companies are subject to certain Risk-Based Capital (“RBC”) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life/health insurance company is to be determined based on the various risk factors related to it. As of December 31, 2018 and 2017, based on calculations pursuant to those requirements, the Company’s total adjusted capital exceeds the company action level RBC.

The Company has surplus notes described below in the amount of $585 million outstanding as of December 31, 2018. During 2016, $405 million was repaid. The issuance of the surplus notes was approved by the insurance regulators with the following repayment conditions and restrictions: payment of principal and accrued interest otherwise required or permissible cannot be made unless approved by the Board of Directors, approved in writing by the Director, and the Company has sufficient earned surplus or such other funds as may be approved by the Director available for such payment.

Surplus notes in the amount of $450 million were issued on February 25, 1994, for cash pursuant to Rule 144A under the Securities Act of 1933. 100% of the issued and outstanding surplus notes are represented by a global note registered in the name of a nominee of the Depository Trust Company. The interest rate is fixed at 7.375%, and interest is payable semi-annually. The notes mature on February 15, 2024. Interest expense was $33 million for years ended December 31, 2018, 2017 and 2016. Total interest paid through December 31, 2018 was $813 million.

Pursuant to two subordinated surplus notes dated September 30, 2008, the Company borrowed the respective amount of $295 million and $110 million from an affiliate, John Hancock Insurance Agency, Inc. (“JHIA”). The interest rate is fixed at 7% per annum and is payable semi-annually. The surplus notes which were to have matured on March 31, 2033 were repaid on November 1, 2016. For the year ended December 31, 2016, the combined interest expense on the notes was $31 million.

Pursuant to an amended and restated subordinated surplus note dated September 30, 2008, the Company borrowed $136 million from JHFC. Interest is calculated and reset quarterly at a fluctuating rate equal to 3-month LIBOR plus 125 basis points and is payable semi-annually. The note which was to have matured on December 15, 2016 was extended to December 14, 2021. Interest expense was $5 million, $3 million, and $3 million for the years ended December 31, 2018, 2017 and 2016, respectively. Total interest paid through December 31, 2018 was $24 million.

Under Michigan State liquidation statutes, the claims of the Depository Trust Company and JHFC (“the surplus noteholders”) come before those of the Company’s shareholders. There is no preferential treatment in claims between the surplus noteholders.

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

11. Related Party Transactions

Service Agreements

The Company has formal service agreements with MFC and MLI, which can be terminated by either party upon two months’ notice. Under the various agreements, the Company will pay a fee for services received under the agreement which includes legal, actuarial, investment, data processing, accounting, and certain other administrative services. Management fees relating to the agreement were $296 million, $347 million, and $329 million, respectively, for the years ended December 31, 2018, 2017 and 2016.

The Company has Administrative Service Agreements with its subsidiaries and affiliates whereby the Company will be reimbursed for operating expenses incurred by the Company. Services provided under the agreement include legal, personnel, marketing, investment accounting, and certain other administrative services and are billed based on intercompany cost allocations or total average daily net assets. The amounts earned under the agreements were $748 million, $767 million, and $811 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Management believes the allocation methods used are reasonable and appropriate in the circumstances; however, the Company’s Balance Sheets and Statements of Operations may not necessarily be indicative of the financial condition that would have existed if the Company operated as an unaffiliated entity.

Other

During 2018, 2017 and 2016, respectively, the Company received dividends of $28 million, $31 million, and $34 million from John Hancock Investment Management Services LLC, $83 million, $72 million, and $71 million from JHD, $100 million, $0 million, and $0 million from JHNY, $0 million, $0 million, and $0 million from JHLH, $404 million, $231 million, and $214 million from John Hancock Subsidiaries, LLC (“JHS LLC”), and $0 million, $0 million, and $19 million from John Hancock Partnership Holdings I & II, $1 million, $10 million, and $0 million from CLA CRE Opportunity Fund I LP and $27 million, $0 million and $0 million from CIP / MCRT Longview Meadows LLC (“Concord Mews”). These dividends are included in the Company’s net investment income.

During 2018 and 2017, the Company made a capital contribution of $0 million and $0 million to JHS LLC.

The Company did not make a capital contribution to its wholly-owned subsidiary, MMRC in 2018. During 2017, the Company made a capital contribution of $40 million to MMRC, in exchange for one hundred and one shares of the common stock of MMRC.

During 2018 and 2017, the Company received a return of capital of $80 million and $0 million from its 91% ownership of Concord Mews.

The Company did not own any shares of the stock of its parent, MIC, or its ultimate parent, MFC at December 31, 2018 and 2017, respectively.

The Company did not recognize any impairment write-down for its investment in subsidiaries, controlled or affiliated companies for the years ended December 31, 2018, 2017 and 2016, respectively.

The Company is the owner and beneficiary of corporate owned life insurance (“COLI”) policies issued by JHLH. The asset balances equal to the cash surrender value of the internal COLI policies was $572 million and $558 million at December 31, 2018 and 2017, respectively.

The Company operates a liquidity pool in which affiliates can invest excess cash. Terms of operation and participation in the liquidity pool are set out in the Second Restated and Amended Liquidity Pool and Loan Facility Agreement effective January 1, 2010. The maximum aggregate amounts that JHUSA can accept into the Liquidity Pool are $5 billion in U.S. dollar deposits and $200 million in Canadian dollar deposits. Under the terms of the agreement, certain participants may receive advances from the Liquidity Pool up to certain predetermined limits. By acting as the banker the Company can earn a spread over the amount it pays its affiliates and this aggregation and resulting economies of scale allows the affiliates to improve the investment return on their excess cash. Interest payable on U.S. dollar funds will be reset daily to the one-month U.S. Dollar

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

11. Related Party Transactions - (continued)

 

London Inter-Bank Bid Rate (“LIBID”) and interest payable on Canadian dollar funds is based off the one-month Canadian Dollar Offering Rate (“CDOR”) plus a spread.

The following table details the affiliates and their participation in the Company’s Liquidity Pool:

 

     December 31,  
     2018     2017  
  

 

 

  
     (In millions)  

The Manufacturers Investment Corporation

        $ 66     $ 134  

John Hancock Financial Corporation

      113       114  

Manulife Reinsurance Limited

      17       56  

Manulife Reinsurance (Bermuda) Ltd.

      141       111  

Manulife (Michigan) Reassurance Company

      6       4  

John Hancock Life & Health Insurance Company

      159       180  

John Hancock Reassurance Company, Ltd.

      91       179  

John Hancock Life Insurance Company New York

      293       170  

John Hancock Investment Management Services LLC

      25       23  

John Hancock Subsidiaries LLC

      24       31  

John Hancock Insurance Agency, Inc.

      5       5  

Essex Corporation

      1       -  

JH Signature Services Inc.

      9       8  

JH Partnership Holdings I, II LP

      -       7  

John Hancock Realty Advisors

      6       2  

JH Advisors LLC

      47       66  

Manulife Asset Management (US) LLC

      35       76  

Hancock Capital Investment Management LLC

      15       11  

John Hancock RPS, LLC

      41       31  

The Berkeley Financial Group, LLC

      2       2  

Manulife Holdings (USA), LLC

      -       -  

Signator Insurance Agency, Inc.

      11       11  

JH Networking Insurance Agency, Inc.

      4       5  

John Hancock Administrative Services LLC

      -       -  

John Hancock Financial Network, Inc.

      45       1  

Hancock Natural Resource Group, Inc.

      68       30  

Hancock Forest Management, Inc.

      5       5  

John Hancock Personal Financial Services, LLC

      1       2  

John Hancock Funding Company LLC

      (9 )      -  
  

 

 

  

Total

        $    1,221     $    1,264  
  

 

 

  

Effective March 31, 1996, MLI provides a claims paying guarantee to certain U.S. policyholders. The claims guarantee agreement was terminated effective August 13, 2008, but still remains in effect with respect to policies issued by the Company prior to that date.

MFC fully and unconditionally guarantees payments from the guarantee periods of the accumulation phase for certain of the Company’s market value adjusted annuity contracts.

MFC fully and unconditionally guarantees JHLICO’s SignatureNotes. In December 2009, the entity that formerly issued these notes, JHLICO, ceased to exist and its property and obligations became the property and obligations of the Company.

MFC’s guarantees of the market value adjusted deferred annuity contracts and SignatureNotes are unsecured obligations of MFC and are subordinated in right of payment to the prior payment in full of all other obligations of MFC, except for other

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

11. Related Party Transactions - (continued)

 

guarantees or obligations of MFC, which by their terms are designated as ranking equally in right of payment with or subordinate to MFC’s guarantees of the market value adjusted deferred annuity contracts and SignatureNotes.

The Company also enters into debt and reinsurance transactions with its affiliates. Refer to the debt and reinsurance notes for further details.

12. Commitments, Guarantees, Contingencies, and Legal Proceedings

Commitments: The Company has extended commitments to purchase long-term bonds of $723 million, purchase other invested assets of $2,118 million, purchase real estate of $87 million, and issue agricultural and commercial mortgages of $152 million at December 31, 2018. If funded, loans related to real estate mortgages would be fully collateralized by related properties. Approximately 42% of these commitments expire in 2019.

There were no leasing arrangements that the Company entered into as lessee which could have a material financial effect.

During 2001, the Company entered into an office ground lease agreement, which expires on September 20, 2096. In conjunction with the September 25, 2018 sale of the home office property, the total lease commitment for future years related to the office ground lease was reduced by $343 million. During 2012, the Company entered into a parking lease agreement, which expires on December 31, 2050. The terms of the lease agreements provide for adjustments in future periods. The future minimum lease payments, by year and in the aggregate, under these leases and other non-cancelable operating leases along with the associated sub-lease income are as follows:

 

     Non-cancelable
Operating
Leases		  
     (in millions)  

2019

        $ 9  

2020

      8  

2021

      5  

2022

      3  

2023

      3  

Thereafter

      16  
  

 

 

  

Total

        $    44  
  

 

 

  

The Company does not have any sublease income related to its office space.

The Company’s investment in leveraged leases relates to equipment used primarily in the transportation industries; however, this type of leasing transaction is not a significant part of the Company’s business activities in terms of revenue, net income, or assets.

As of December 31, 2018, the Company recorded a restructuring charge of approximately $56 million, net of tax, primarily related to a voluntary early retirement program as well as costs to optimize our real estate footprint in the United States.

Guarantees: In the course of business, the Company enters into guarantees which vary in nature and purpose and which are accounted for and disclosed under statutory accounting principles.

The Company has issued guarantee agreements pursuant to which the Company guarantees the obligations of JHNY and JHLH under the OTC International Swaps and Derivatives Association, Inc. (“ISDA”) cleared and exchange-traded derivative agreements and transactions entered into by JHNY and JHLH with external counterparties. The ISDA guarantees are subject to an overall limit of $1 billion of Potential Future Exposure, using a three-week and 95% confidence parameters, in calculating the counterparty risk exposure.

The Company is party to a financial support agreement with JHLH pursuant to which it has agreed to maintain JHLH’s capital level such that its risk-based capital ratio shall be at or above 225% of the company action level annually. In addition,

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

12. Commitments, Guarantees, Contingencies, and Legal Proceedings - (continued)

 

under the terms of the financial support agreement, the Company undertakes to provide sufficient liquidity to enable JHLH to make timely payment of its contractual obligations.

Contingencies: The Company is an investor in a number of leasing transactions. On August 5, 2013, the U.S. Tax Court issued an opinion effectively ruling in the government’s favor in the litigation between John Hancock and the IRS involving the tax treatment of John Hancock’s investment in certain leveraged leases. On March 30, 2016, the Company and the IRS finalized an agreement determining the impact of the decision on tax years subsequent to the years that were decided by the Court. There was no material impact to the Company’s financial position or results of operations as a result of the agreement.

The Company acts as an intermediary/broker in OTC derivative instruments. In these cases, the Company enters into derivative transactions on behalf of affiliated companies and then enters into offsetting derivative transactions with the affiliate. In the event of default of either party, the Company is still obligated to fulfill its obligations with the other party.

The Company is subject to insurance guaranty fund laws in the states in which it does business. Pursuant to these laws, insurance companies are assessed, and required to make periodic payments, to be used to pay benefits to policyholders and claimants of insolvent or rehabilitated insurance companies. Many states allow these assessments to be credited against future premium taxes. The Company believes such assessments in excess of amounts accrued will not materially affect its financial position.

Legal Proceedings: The Company is regularly involved in litigation, both as a defendant and as a plaintiff. The litigation naming the Company as a defendant ordinarily involves its activities as a provider of insurance protection and wealth management products, an employer, and a taxpayer. In addition, the Michigan Department of Insurance and Financial Services, the Michigan Attorney General, the SEC, the Financial Regulatory Authority, and other government and regulatory bodies regularly make inquiries and, from time to time, require the production of information or conduct examinations concerning the Company’s compliance with, among other things, insurance laws, securities laws, and laws governing the activities of broker-dealers. An estimation of the range of potential outcomes in any given matter is often unavailable until such matters have developed and sufficient information emerges to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts, and the progress of settlement negotiations. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation contingencies and updates its accruals and estimates of reasonably possible losses or ranges of loss based on such reviews.

A class action against the Company is pending in the U.S. District Court for the Southern District of New York (the “Southern District of NY”) in which claims are made that the Company breached, and continues to breach, the contractual terms of certain universal life policies issued between approximately 1990 and 2006 by including impermissible charges in its cost of insurance (“COI”) calculations and certain other rider charges. The Company believes that its COI calculations have been, and continue to be, in accordance with the terms of the policies. In May 2018, the parties agreed to the financial terms of a settlement in the amount of $91 million. On November 1, 2018, the court granted preliminary approval of the $91 million settlement for Besen and scheduled a fairness hearing for February 19, 2019. Distribution of notice of the settlement to the class commenced on December 26, 2018. A similar class action based on the same policy language in dispute in the case pending in New York had been pending in California. The parties have settled all claims alleged in the California action. On May 8, 2018, the court granted final approval of the settlement, and the settlement amount of $60 million has been paid.

In June 2018, a class action was initiated against the Company in the Southern District of NY on behalf of owners of performance universal life policies issued between 2003 and 2009 whose policies are subject to a COI increase announced in 2018. In October 2018, an almost identical class action was initiated against the Company in the Southern District of New York. It was filed as a related case as the one filed in June and has been assigned to the same judge. Discovery has commenced in these cases and will continue through 2019. It is too early to assess the range of potential outcomes for these two related lawsuits.

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

13. Annuity Actuarial Reserves

The Company’s annuity actuarial reserves and deposit fund liabilities and related separate account liabilities that are subject to discretionary withdrawal (with adjustment), subject to discretionary withdrawal (without adjustment), and not subject to discretionary withdrawal provisions are summarized as follows:

 

     December 31, 2018  
     General
Account		      Separate
Account
with
Guarantees		      Separate
Account
Nonguaranteed		      Total      Percent of
Total		  
  

 

 

  
     (in millions)  

Subject to discretionary withdrawal:

               

With fair value adjustment

        $ 522      $ 337      $ 1,385      $ 2,244        2 % 

At book value less current surrender charge of 5% or more

      2        -        -        2        0 % 

At fair value

      -        -        109,160        109,160        83 % 
  

 

 

  

Total with adjustment or at fair value

      524        337        110,545        111,406        85 % 

At book value without adjustment (minimal or no charge or adjustment)

      4,937        -        -        4,937        4 % 

Not subject to discretionary withdrawal

      14,577        207        147        14,931        11 % 
  

 

 

  

Total (gross)

         20,038        544        110,692        131,274        100 % 
              

 

 

  

Reinsurance ceded

      10,830        -        -        10,830     
  

 

 

     

Total (net)

        $ 9,208      $    544      $    110,692      $    120,444     
  

 

 

     
     December 31, 2017  
     General
Account		      Separate
Account
with
Guarantees		      Separate
Account
Nonguaranteed		      Total      Percent of
Total		  
  

 

 

  
     (in millions)  

Subject to discretionary withdrawal:

               

With fair value adjustment

        $ 448      $ 400      $ 1,720      $ 2,568        2 % 

At book value less current surrender charge of 5% or more

      2        -        -        2        0 % 

At fair value

      -        -        124,432        124,432        84 % 
  

 

 

  

Total with adjustment or at fair value

      450        400        126,152        127,002        86 % 

At book value without adjustment (minimal or no charge or adjustment)

      5,412        -        -        5,412        4 % 

Not subject to discretionary withdrawal

      14,987        227        171        15,385        10 % 
  

 

 

  

Total (gross)

      20,849        627        126,323        147,799        100 % 
              

 

 

  

Reinsurance ceded

      4,526        -        -        4,526     
  

 

 

     

Total (net)

        $    16,323      $    627      $    126,323      $    143,273     
  

 

 

     

 

F-71

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

14. Separate Accounts

Separate accounts held by the Company include individual and group variable annuity and variable life products that offer guaranteed and non-guaranteed returns. The net investment experience of the separate account is credited directly to the policyholder and can be positive or negative.

For guarantees of amounts in the event of death, the net amount at risk is defined as the excess of the initial sum insured over the current sum insured for fixed premium variable life insurance contracts, and, for other variable life insurance contracts, is equal to the sum insured when the account value is zero and the policy is still in force.

The deposits related to variable annuities generally provide a GMDB. For annuity products, this can take the form of either (a) return of no less than total deposits made to the contract less any partial withdrawals; (b) total deposits made to the contract less any partial withdrawals plus a minimum return; (c) the highest contract value on a specified anniversary date minus any withdrawals following the contract anniversary; or (d) a combination benefit of (b) and (c) above. The assets and liabilities of these accounts are carried at fair value. The GMDB reserve is held in the Company’s general account policy reserves.

The Company sold contracts with GMIB riders from 1998 to 2004. The GMIB rider provides a guaranteed lifetime annuity which may be elected by the contract holder after a stipulated waiting period (7 to 15 years), and which may be larger than what the contract account balance could purchase at then-current annuity purchase rates.

The Company sold contracts with a GMWB rider and has since offered multiple variations of this optional benefit. The GMWB rider provides contract holders a guaranteed annual withdrawal amount over a specified time period or in some cases for as long as they live. In general, guaranteed annual withdrawal amounts are based on deposits and may be reduced if withdrawals exceed allowed amounts. Guaranteed amounts may also be increased as a result of “step-up” provisions which increase the benefit base to higher account values at specified intervals. Guaranteed amounts may also be increased if withdrawals are deferred over a specified period. In addition, certain versions of the GMWB rider extend lifetime guarantees to spouses.

Reinsurance has been utilized to mitigate risk related to some of the GMDB and GMIB riders.

For GMDB, the net amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance. For GMIB, the net amount at risk is defined as the excess of the current annuitization income base over the current account value. For GMWB, the net amount at risk is defined as the current guaranteed withdrawal amount minus the current account value. For all the guarantees, the net amount at risk is floored at zero at the single contract level.

The deposits related to the variable life insurance contracts are invested in separate accounts and the Company guarantees a specified death benefit if certain specified premiums are paid by the policyholder, regardless of separate account performance.

The assets legally insulated from the general account are attributed to the following products/transactions:

 

Product/Transaction    Separate Account Legally
Insulated Assets		     

Separate Account

Not Legally
Insulated Assets

  
  

 

 

  
     December 31,  
     2018      2017      2018      2017  
  

 

 

  
     (in millions)  

Group Annuity Contracts (401K)

        $ 78,443      $ 87,377      $ -      $ -  

Variable and Fixed Annuities

      29,250        35,552        21        23  

Life Insurance

         12,771           14,081        -        -  

Fixed Products - Institutional and stable value fund

      1,743        2,140        -        -  

Fixed Products - Retail

      26        26           351           413  

Investments - Funds

      1,526        1,555        -        -  
  

 

 

  

Total

        $ 123,759      $ 140,731      $ 372      $ 436  
  

 

 

  

 

F-72

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

14. Separate Accounts - (continued)

 

To compensate the general account for the risk taken, the separate account paid risk charges and amounts toward separate account guarantees as follows:

 

     Risk Charges
Paid to General
Account		      Amounts toward
Separate Account
Guarantees		  
  

 

 

  
     (in millions)  

2018

        $ 210          $ 54  

2017

        $ 220          $ 62  

2016

        $ 231          $ 89  

2015

        $ 241          $ 59  

2014

        $    252          $    74  

The Company had the following variable annuities with guaranteed benefits:

 

     December 31,  
     2018      2017  
  

 

 

  
     (in millions, except for ages)  

Account value

        $    29,577          $    36,044  

Amount of reserve held

      1,230        821  

Net amount at risk - gross

      7,778        4,817  

Weighted average attained age

      69        69  

The following assumptions and methodology were used to determine the amounts above at December 31, 2018 and 2017:

 

  •  

Actuarial Guideline 43 (“AG 43”) is used in both years to determine the aggregate reserve for products falling under the scope. Assumptions used in the standard scenario are prescribed by the guideline. Assumptions used in the stochastic scenarios are detailed below.

 

  •  

The stochastically generated projection scenarios have met the scenario calibration criteria prescribed in AG 43.

 

  •  

In 2018 and 2017, annuity mortality is based on the Ruark Variable Annuity Table, which is based on an industry study of variable annuity deaths. The table is further adjusted by factors varied by rider types (living benefit/GMDB only) and qualified and non-qualified business.

 

  •  

In 2018 and 2017, annuity base lapse rates vary by product, policy year, and rider type, where the lapse rates range from 0.5% to 40% for GMDB, GMIB and GMWB. In 2018 the base lapse rates also varied by utilizer status. These rates are dynamically reduced for guarantees that are in-the-money. Beginning in 2012, rates are also dynamically increased for GMWBs that are out-of-the-money.

 

  •  

For variable annuities, the swap curve at December 31 is used for discounting in both years.

 

  •  

For variable annuities, mean return, volatility and correlation assumptions are determined by indices, which have met the calibration criteria prescribed in AG 43.

Account balances of variable contracts with guarantees were invested in various separate accounts with the following characteristics:

 

F-73

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

14. Separate Accounts - (continued)

 

     December 31,  
     2018      2017  
  

 

 

  
     (in millions)  

Type of Fund

      

Equity

        $    24,071      $ 28,880  

Balanced

      8,365        10,009  

Bonds

      5,615        6,381  

Money Market

      517        519  
  

 

 

  

Total

        $ 38,568      $    45,789  
  

 

 

  

Information regarding the separate accounts of the Company is as follows:

 

    December 31,  
    2018     2017  
 

 

 

  
    Nonindexed
Guarantee Less
than or Equal
to 4%		     Nonguaranteed
Separate
Account		     Total     Nonindexed
Guarantee Less
than or Equal
to 4%		     Nonguaranteed
Separate
Account		     Total  
 

 

 

  
    (in millions)  

Premiums, deposits and other considerations

       $ -     $ 14,007     $ 14,007     $ -     $ 14,395     $ 14,395  
 

 

 

  

Reserves for accounts with assets at:

            

Fair value

     544       123,076       123,620       627       139,896       140,523  

Amortized cost

     -       -       -       -       -       -  
 

 

 

  

Total

       $    544     $    123,076     $    123,620     $    627     $    139,896     $    140,523  
 

 

 

  

 

F-74

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

14. Separate Accounts - (continued)

 

     December 31,  
     2018      2017  
  

 

 

  
     Nonindexed
Guarantee
Less than
or Equal
to 4%		      Nonguaranteed
Separate
Account		      Total      Nonindexed
Guarantee
Less than
or Equal to
4%		      Nonguaranteed
Separate Account		      Total  
  

 

 

  
     (in millions)  

Reserves for separate accounts by withdrawal characteristics:

                  

Subject to discretionary withdrawal:

                  

With fair value adjustment

        $ 337      $ 1,385      $ 1,722      $ 400      $ 1,720      $ 2,120  

At book value without fair value adjustments and with current surrender charge of 5% or more

      -        1,329        1,329        -        1,494        1,494  

At fair value

      -        118,543        118,543        -        134,740        134,740  

At book value without fair value adjustments and with current surrender charge of less than 5%

      -        1,671        1,671        -        1,771        1,771  
  

 

 

  

Subtotal

      337        122,928        123,265        400        139,725        140,125  

Not subject to discretionary withdrawal

      207        148        355        227        171        398  
  

 

 

  

Total

        $    544      $    123,076      $    123,620      $    627      $    139,896      $    140,523  
  

 

 

  

Amounts transferred to and from separate accounts are as follows:

 

     December 31,  
     2018     2017     2016  
  

 

 

  
     (in millions)  

Transfers to separate accounts

        $ 15,071     $ 17,679     $ 17,163  

Transfers from separate accounts

         22,687          26,385          22,744  
  

 

 

  

Net transfers to (from) separate accounts

        $ (7,616 )    $ (8,706 )    $ (5,581 ) 
  

 

 

  

 

F-75

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

15. Employee Benefit Plans

Retirement Plans: The Company participates in the John Hancock Pension Plan, a qualified defined benefit plan that covers substantially all of its employees. The Company also participates in the John Hancock Non-Qualified Pension Plan, a nonqualified defined benefit plan for employees whose qualified cash balance benefit is restricted by the Internal Revenue Code. Both plans are sponsored by MIC. The non-qualified defined benefit plan was frozen except for grandfathered participants as of January 1, 2008, and the benefits accrued under this plan continue to be subject to the plan’s provisions.

The Company is jointly and severally liable for the funding requirements of the plans and will recognize its allocation, from MIC, of the required contributions to the plans as pension expense in its Statements of Operations. The allocation is derived by utilizing participant data, provided by the plan actuary, to calculate payments into the trust for the qualified plan and payments to participants for the non-qualified plan. The expense for these plans was $26 million, $34 million, and $30 million in 2018, 2017 and 2016, respectively.

The Company participates in the John Hancock Supplemental Retirement Plan, a non-qualified defined contribution plan maintained by MFC, which was established as of January 1, 2008 with participant directed investment options. The expense for this plan was not material for the years ended 2018, 2017 and 2016, respectively. The prior non-qualified defined contribution plan was frozen except for grandfathered participants as of January 1, 2008, and the benefits accrued under the prior plan continue to be subject to the prior plan provisions.

The Company also maintains a separate rabbi trust for the purpose of holding assets to be used to satisfy its obligations with respect to certain other non-qualified retirement plans of $308 million and $328 million at December 31, 2018 and 2017, respectively. In the event of insolvency of the Company, the rabbi trust assets can be used to satisfy claims of general creditors.

During the year, the Company implemented its North American voluntary early retirement program. The program will result in the voluntary separation of 229 employees in the U.S. by the end of 2019. A curtailment loss of $7 million resulting from the program was recorded by MIC in earnings during the 4th quarter of 2018. This loss represents the change in net defined benefit and retiree welfare liabilities due to employees separating sooner and with different post-retirement benefits than had previously been assumed. The Company will recognize its allocation of the curtailment loss in earnings as payments to participants are made.

401 (k) Plans: The Company participates in qualified defined contribution plans for its employees who meet certain eligibility requirements. These plans include the Investment-Incentive Plan for John Hancock Employees and the John Hancock Savings and Investment Plan. Both plans are sponsored by JHUSA. Expense is primarily comprised of the amounts the Company contributes to the plans, which fully matches eligible participants’ basic pre-tax or Roth contributions, subject to a 4% per participant maximum. The expense for the defined contribution plans was not material for the years ended 2018, 2017 and 2016, respectively.

Deferred Compensation Plan: The Company maintains the Deferred Compensation Plan for Certain Employees of John Hancock, and the Deferred Compensation Plan of the John Hancock Financial Network, both of which are deferred compensation plans sponsored by MFC. These plans are for a select group of management or highly compensated employees and certain qualified agents. The plans are fully funded and accounts are maintained by a third-party administrator. Under these plans, participants have the flexibility and opportunity to invest their plan balances in mutual funds. The liability for these plans at December 31, 2018 and 2017 was $108 million and $112 million, respectively.

Prior to January 1, 2006, the Company offered the Legacy Deferred Compensation Plan for Certain Employees of John Hancock Life Insurance Company (USA), the legacy plan, which is closed to new participation and is unfunded. These are notional accounts and all liabilities have remained with the Company and are paid out of general account assets when a distribution is taken. The liability for this plan was not material as of December 31, 2018 and 2017 respectively.

Postretirement Benefit Plan: The Company participates in the John Hancock Employee Welfare Plan which is sponsored by MIC. Consistent with the pension plan, the Company is jointly and severally liable for the funding requirements of the plan and will recognize its allocation, from MIC, of the benefits earned by plan participants as postretirement benefits expense in its Statements of Operations. The allocation is derived by utilizing participant data, provided by the plan actuary, to calculate the benefits earned; i.e., service cost, relating to participants employed by the Company. In addition, any difference between

 

F-76

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

15. Employee Benefit Plans - (continued)

 

actual cash paid for benefits to plan participants and benefits earned is recorded directly to unassigned surplus. The expense

and charge to surplus for the John Hancock Employee Welfare Plan were not material for the years ended 2018, 2017 and 2016, respectively.

16. Lines of Credit, Consumer Notes and Affiliated Debt

Lines of Credit: At December 31, 2018, JHUSA and MIC share in a committed line of credit established by MFC totaling $1 billion, which was extended to 2023. MFC will commit, when requested, to loan funds at prevailing interest rates as determined in accordance with the line of credit agreement. Under the terms of the agreement, the Company is required to maintain a certain minimum level of net worth and comply with certain other covenants, as long as any amount is owed to the lender under the agreement. At December 31, 2018, the Company had no outstanding borrowings under the agreement.

The Company had a committed line of credit agreement established by MLI totaling $1 billion. MLI committed, when requested, to loan funds at prevailing interest rates as determined in accordance with the line of credit agreement. Under the terms of the agreement, the Company is required to maintain a certain minimum level of net worth and comply with certain other covenants as long as any amount is owed to the lender under the agreement. The committed line of credit expired on March 18, 2018.

At December 31, 2018, the Company, MFC, and other MFC subsidiaries had a committed line of credit through a group of banks totaling $500 million pursuant to a multi-year facility, which will expire in 2021. The banks will commit, when requested, to loan funds at prevailing interest rates as determined in accordance with the line of credit agreement. Under the terms of the agreement, MFC is required to maintain a certain minimum level of net worth, and MFC and the Company are required to comply with certain other covenants, which were met at December 31, 2018. At December 31, 2018, MFC and its subsidiaries, including the Company, had no outstanding borrowings under the agreement.

At December 31, 2018, the Company had a line of credit agreement established with JHS LLC totaling up to $120 million, which will expire February 15, 2022. Under the agreement, the Company may loan funds, when requested, at prevailing interest rates as determined in accordance with the line of credit agreement. At December 31, 2018, the Company had $115 million outstanding borrowings under the agreement with a fair value of $115 million. This loan replaced a senior note receivable for $30 million issued by JHS LLC during 2016, and additional advances of $25 million on February 15, 2017 and $60 million on May 21, 2018. Interest on the loan is calculated at a fluctuating rate equal to the 360 day-year for the actual number of days elapsed and is payable annually. The combined interest income on the loans was $3 million and $1 million for the year ended December 31, 2018 and 2017.

Effective April 17, 2018, the Company entered into a committed line of credit agreement with John Hancock Funding Company LLC, (“JHFLLC”), a wholly-owned subsidiary of JHS LLC, totaling up to $400 million which will expire April 27, 2023. Under the agreement, the Company may loan funds, when requested, at prevailing interest rates as determined in accordance with the line of credit agreement. Interest on the loan is calculated at a fluctuating rate equal to the 360 day-year for the actual number of days elapsed and is payable quarterly. At December 31, 2018, the Company had no outstanding borrowings under the agreement.

Consumer Notes: The Company issued consumer notes through its SignatureNotes Program. SignatureNotes may be redeemed upon the death of the holder, subject to an annual overall program redemption limitation of 1% of the aggregate securities outstanding, or $1 million, or an individual redemption limitation of $200,000 of aggregate principal. SignatureNotes have a variety of issue dates, maturities, interest rates and call provisions. The notes payable balance as of December 31, 2018 and 2017 was $154 million and $197 million, respectively. Interest ranging from 4.9% to 6.0%. The notes are due in varying amounts to 2032.

Aggregate maturities of consumer notes are as follows: 2019-$16 million; 2020-$0 million; 2021-$0 million; 2022-$13 million; 2023-$33 million; and thereafter $92 million.

Interest expense on consumer notes, included in benefits to policyholders, was $10 million, $11 million, and $12 million in 2018, 2017 and 2016, respectively. Interest paid amounted to $8 million, $11 million, and $11 million in 2018, 2017 and 2016, respectively.

 

F-77

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

16. Lines of Credit, Consumer Notes and Affiliated Debt - (continued)

 

Affiliated Debt: Pursuant to a demand note receivable dated September 30, 2008, the Company had $295 million outstanding with MIC. The note, which was to have matured on March 31, 2013, was extended to March 31, 2018. This note was reported

as a nonadmitted asset at December 31, 2016 since the counterparty is the parent entity of the Company; however, this note continued to accrue interest throughout the duration of the contract as per the terms of the note. Prior to March 31, 2013, the interest rate was calculated at a fluctuating rate equal to 3-month LIBOR plus 83 basis points per annum. Following the extension, the interest rate was calculated at a fluctuating rate equal to 3-month LIBOR plus 180 basis points per annum. Interest income was $0 million, $7 million, and $7 million for the years ended December 31, 2018, 2017 and 2016, respectively. The demand note receivable was fully repaid on September 30, 2017.

Pursuant to a promissory note dated June 28, 2012, the Company borrowed $153 million from Manulife Finance Switzerland AG (“MFSA”). Interest on the loan was calculated at a fluctuating rate equal to 3-month LIBOR plus 90 basis points per annum and was payable quarterly. In addition, the Company renewed two previously outstanding promissory notes to MFSA with an outstanding balance of $7 million and combined these notes with the new note issued on June 28, 2012, thus bringing the total principal balance due to $160 million. On June 3, 2015, the maturity date was extended for a period of one year to June 28, 2016. Following the extension, the interest rate was amended and was calculated at a fluctuating rate equal to 3-month LIBOR plus 88 basis points per annum and was payable quarterly effective from June 28, 2015. On May 31, 2016, the maturity date was extended for a period of one year to June 28, 2017. Following the extension, the interest rate was amended and was calculated at a fluctuating rate equal to 3-month LIBOR plus 88 basis points per annum and was payable quarterly effective from June 28, 2016. On May 22, 2017, the maturity date was extended for a period of one year to June 28, 2018. Following the extension, the interest rate was amended and was calculated at a fluctuating rate equal to 3-month LIBOR plus 88 basis points per annum and was payable quarterly effective from June 28, 2017. Interest expense was $0 million, $3 million, and $3 million for the years ended December 31, 2018, 2017 and 2016, respectively. The promissory note was fully repaid as of December 31, 2017.

Pursuant to a senior note receivable dated December 9, 2014, the Company had $40 million outstanding with JHS LLC as of December 31, 2016. During 2017, JHS LLC repaid $15 million of the outstanding loan bringing the outstanding principal balance to $25 million with a fair value of $25 million as of December 31, 2017. During 2018, JHS LLC repaid $15 million of the outstanding loan bringing the outstanding principal balance to $10 million with a fair value of $10 million as of December 31, 2018. The note matures on December 9, 2019. Interest on the loan is calculated at a fluctuating rate equal to the 3-month LIBOR rate plus 180 basis points per annum and is payable quarterly. Interest income was $1 million, $1 million, and $1 million for the years ended December 31, 2018, 2017 and 2016, respectively.

FHLB (Federal Home Loan Bank) Agreements: The Company is a member of the Federal Home Loan Bank of Indianapolis (FHLBI). The Company uses advances from the FHLBI as a part of its liquidity management program, and any funds obtained for this purpose would be accounted for as borrowed money.

 

F-78

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

16. Lines of Credit, Consumer Notes and Affiliated Debt - (continued)

 

The following table indicates the aggregate amount of the FHLBI capital stock held related to the agreement:

 

     December 31, 2018  
    

(1)

(Col 2 +3)

Total

     

(2)

General
Account

     

(3)

Separate
Account

  
  

 

 

  
     (in millions)  

(a) Membership stock - Class A

        $ -          $ -          $ -  

(b) Membership stock - Class B

      19        19        -  

(c) Activity stock

      -        -        -  

(d) Excess stock

      -        -           -  

(e) Aggregate total

        $ 19          $    19          $ -  

(f) Actual or estimated borrowing capacity as determined by the insurer

        $    430        
     December 31, 2017  
    

(1)

(Col 2 +3)

Total

     

(2)

General
Account

     

(3)

Separate
Account

  
  

 

 

  
     (in millions)  

(a) Membership stock - Class A

        $ -          $ -          $ -  

(b) Membership stock - Class B

      19        19        -  

(c) Activity stock

      -        -        -  

(d) Excess stock

      -        -           -  

(e) Aggregate total

        $ 19          $    19          $ -  

(f) Actual or estimated borrowing capacity as determined by the insurer

        $    421        

FHLBI membership stock of $0 million and $0 million was classified as not eligible for redemption for the years ended December 31, 2018 and 2017, respectively.

The following table indicates the collateral pledged to the FHLBI at the end of the year:

 

     December 31, 2018  
     Fair Value      Carrying
Value		      Aggregate Total
Borrowing		  
  

 

 

  
     (in millions)  

(a) General account

        $ -      $ -      $ -  

(b) Separate account

      -        -        -  
  

 

 

  

(c) Total collateral pledged

        $    -      $    -      $    -  
  

 

 

  
     December 31, 2017  
     Fair Value      Carrying
Value		      Aggregate Total
Borrowing		  
  

 

 

  
     (in millions)  

(a) General account

        $ -      $ -      $ -  

(b) Separate account

      -        -        -  
  

 

 

  

(c) Total collateral pledged

        $    -      $    -      $    -  
  

 

 

  

The following table indicates the maximum collateral pledged to the FHLBI during the year:

 

F-79

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

16. Lines of Credit, Consumer Notes and Affiliated Debt - (continued)

 

     December 31, 2018  
     Fair Value      Carrying
Value		      Amount
Borrowed at Time
of Maximum
Collateral		  
  

 

 

  
     (in millions)  

(a) General account

        $     -      $ -      $ -  

(b) Separate account

      -        -        -  
  

 

 

  

(c) Total maximum collateral pledged

        $ -      $    -      $    -  
  

 

 

  
     December 31, 2017  
     Fair Value      Carrying
Value		     

Amount
Borrowed at Time
of Maximum

Collateral

  
  

 

 

  
     (in millions)  

(a) General account

        $    803      $    755      $    400  

(b) Separate account

      -        -        -  
  

 

 

  

(c) Total maximum collateral pledged

        $ 803      $ 755      $ 400  
  

 

 

  

The following table represents the aggregate amount of borrowing from FHLBI:

 

     December 31, 2018  
    

(1)

(Col 2 +3)

Total

     

(2)

General
Account

     

(3)

Separate
Account

     

(4)

Funding
Agreements
Reserves
Established

  
  

 

 

  
     (in millions)  

(a) Debt

        $ -      $ -      $ -      $ -  

(b) Funding agreements

      -        -        -        -  

(c) Other

      -        -        -        -  

(d) Aggregate total

        $    -      $    -      $    -      $    -  
     December 31, 2017  
    

(1)

(Col 2 +3)

Total

     

(2)

General
Account

     

(3)

Separate
Account

     

(4)

Funding
Agreements
Reserves
Established

  
  

 

 

  
     (in millions)  

(a) Debt

        $ -      $ -      $ -      $ -  

(b) Funding agreements

      -        -        -        -  

(c) Other

      -        -        -           -  

(d) Aggregate total

        $    -      $    -      $    -      $ -  

The maximum amount of aggregate borrowings from FHLBI during 2018 was $0 million. The Company is not subject to any prepayment obligations under current borrowing agreements.

17. Closed Block

The Company operates a closed block for the benefit of certain classes of individual or joint traditional participating whole life insurance policies. The JHUSA closed block was established upon the demutualization of MLI for those designated participating policies that were in-force on September 23, 1999.

 

F-80

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

17. Closed Block - (continued)

 

Assets were allocated to the closed block in an amount that, together with anticipated revenues from policies included in the closed block, was reasonably expected to be sufficient to support such business, including provision for payment of benefits, direct asset acquisition and disposition costs, taxes, and for continuation of dividend scales, assuming experience underlying such dividend scales continues.

Assets allocated to the closed block inure solely to the benefit of policyholders included in the closed block and will not revert to the benefit of the shareholders of the Company. In addition, if the assets allocated to the closed block and the revenues from the closed block business prove to be insufficient to pay the benefits guaranteed in the closed block, the Company will be required to make payments from its general funds in an amount equal to the shortfall.

If, over time, the aggregate performance of the assets and policies of a closed block is better than was assumed in funding that closed block, dividends to policyholders for that closed block will be increased. If, over time, the aggregate performance of the assets and policies of a closed block is less favorable than was assumed in funding that closed block, dividends to policyholders for that closed block will be reduced.

No reallocation, transfer, borrowing, or lending of assets can be made between the closed block and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without prior notification to or approval of the Insurance Department.

The excess of the closed block liabilities over the closed block assets represents the expected future post-tax contribution from the closed block which may be recognized in income over the period the policies and contracts in the closed block remain in force.

The following table sets forth certain summarized financial information relating to the JHUSA closed block.

 

     JHUSA  
     2018      2017  
  

 

 

  
     (in millions)  

Assets:

      

Bonds

        $ 2,222      $ 2,744  

Stocks:

      

Preferred stocks

      -        -  

Common stocks

      -        -  

Mortgage loans on real estate

      327        247  

Real estate

      661        704  

Cash, cash equivalents and short-term investments

      332        4  

Policy loans

      1,734        1,694  

Other invested assets

      407        248  
  

 

 

  

Total cash and invested assets

      5,683           5,641  

Investment income due and accrued

      110        102  

Premiums due

      4        5  

Net deferred tax asset

      32        73  

Other closed block assets

      372        46  
  

 

 

  

Total closed block assets

        $ 6,201      $ 5,867  
  

 

 

  

Obligations:

      

Policy reserves

         5,407        5,515  

Policyholders’ and beneficiaries’ funds

      58        60  

Dividends payable to policyholders

      304        322  

Policy benefits in process of payment

      61        71  

Other policy obligations

      6        1  

Other closed block obligations

      663        500  
  

 

 

  

Total closed block obligations

        $ 6,499      $ 6,469  
  

 

 

  

 

F-81

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS – (CONTINUED)

 

18. Subsequent Events

The Company evaluated the recognition and disclosure of subsequent events for its December 31, 2018 financial statements through April 3, 2019, the date the financial statements were issued.

The Company has a number of reinsurance agreements with Scottish Re (U.S.), Inc. (“SRUS”). On March 6, 2019, SRUS was declared impaired and placed into rehabilitation by the Delaware Chancery Court with the anticipation that a Plan of Rehabilitation that addresses and removes the causes of SRUS’s impairment be submitted to the Receiver and the Court for approval. In the event a Plan of Rehabilitation is not submitted and approved, the rehabilitation proceedings could convert into liquidation proceedings. As of December 31, 2018, the Company recorded a reserve credit and a reinsurance receivable of approximately $209 million and $33 million, respectively, related to the various agreements with SRUS.

 

F-82

Table of Contents

 

 

AUDITED FINANCIAL STATEMENTS

John Hancock Life Insurance Company (U.S.A.) Separate Account A

December 31, 2018

Table of Contents

John Hancock Life Insurance Company (U.S.A.) Separate Account A

Audited Financial Statements

December  31, 2018

Contents

 

Report of Independent Registered Public Accounting Firm

      3  

Statements of Assets and Liabilities

      6  

Statements of Operations and Changes in Contract Owners’ Equity

      23  

Notes to Financial Statements

      57  

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of John Hancock Life Insurance Company (U.S.A.) and Contract Owners of

John Hancock Life Insurance Company (U.S.A.) Separate Account A

Opinion on the Financial Statements

We have audited the accompanying statements of assets and liabilities of each of the subaccounts listed in the Appendix that comprise John Hancock Life Insurance Company (U.S.A.) Separate Account A (the Separate Account), as of December 31, 2018, and the related statements of operations and changes in contract owners’ equity for the two years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each subaccount as of December 31, 2018 and the results of its operations and changes in contract owners’ equity for the two years then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Separate Account’s management. Our responsibility is to express an opinion on each of the subaccounts’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Separate Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the fund companies, or their transfer agents, as applicable. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

LOGO

We have served as the auditor of the Separate Account since 1987.

Boston, Massachusetts

April 3, 2019

 

3

Table of Contents

Appendix

Subaccounts comprising John Hancock Life

Insurance Company (U.S.A) Separate Account A

 

500 Index Fund Series NAV

   

Lifestyle Conservative Portfolio Series NAV

    

Lifestyle Growth Portfolio Series I

Active Bond Trust Series I

   

Lifestyle Growth Portfolio Series NAV

Active Bond Trust Series NAV

   

Lifestyle Moderate Portfolio Series NAV

    

M Capital Appreciation

    

M International Equity

American Asset Allocation Trust Series I

   

M Large Cap Growth

American Global Growth Trust Series I

   

M Large Cap Value

American Growth Trust Series I

   

Managed Volatility Aggressive Portfolio Series I

American Growth-Income Trust Series I

   

Managed Volatility Aggressive Portfolio Series NAV

American International Trust Series I

   

Managed Volatility Balanced Portfolio Series I

Blue Chip Growth Trust Series I

   

Managed Volatility Balanced Portfolio Series NAV

Blue Chip Growth Trust Series NAV

   

Managed Volatility Conservative Portfolio Series I

    

Managed Volatility Conservative Portfolio Series NAV

    

Managed Volatility Growth Portfolio Series I

Capital Appreciation Trust Series I

   

Managed Volatility Growth Portfolio Series NAV

Capital Appreciation Trust Series NAV

   

Managed Volatility Moderate Portfolio Series I

Capital Appreciation Value Trust Series I

   

Managed Volatility Moderate Portfolio Series NAV

Capital Appreciation Value Trust Series NAV

   

Mid Cap Index Trust Series I

Core Bond Trust Series I

   

Mid Cap Index Trust Series NAV

Core Bond Trust Series NAV

   

Mid Cap Stock Trust Series I

Emerging Markets Value Trust Series I

   

Mid Cap Stock Trust Series NAV

Emerging Markets Value Trust Series NAV

   

Mid Value Trust Series I

Equity Income Trust Series I

   

Mid Value Trust Series NAV

Equity Income Trust Series NAV

   

Money Market Trust Series I

    

Money Market Trust Series NAV

Financial Industries Trust Series I

   

PIMCO All Asset

Financial Industries Trust Series NAV

   

Real Estate Securities Trust Series I

Fundamental All Cap Core Trust Series I

   

Real Estate Securities Trust Series NAV

Fundamental All Cap Core Trust Series NAV

   

Science & Technology Trust Series I

Fundamental Large Cap Value Trust Series I

   

Science & Technology Trust Series NAV

    

Select Bond Trust Series I

    

Select Bond Trust Series NAV

Fundamental Large Cap Value Trust Series NAV

   

Short Term Government Income Trust Series I

Global Bond Trust Series I

   

Short Term Government Income Trust Series NAV

Global Bond Trust Series NAV

   

Small Cap Stock Trust Series I

Global Trust Series I

   

Small Cap Stock Trust Series NAV

Global Trust Series NAV

   

Small Cap Index Trust Series I

Health Sciences Trust Series I

   

Small Cap Index Trust Series NAV

Health Sciences Trust Series NAV

   

Small Cap Opportunities Trust Series I

High Yield Trust Series I

   

Small Cap Opportunities Trust Series NAV

      

 

4

Table of Contents

Subaccounts comprising John Hancock Life

Insurance Company (U.S.A) Separate Account A

 

High Yield Trust Series NAV

   

Small Cap Value Trust Series I

International Equity Index Series I

   

Small Cap Value Trust Series NAV

International Equity Index Series NAV

   

Small Company Value Trust Series I

International Growth Stock Trust Series I

   

Small Company Value Trust Series NAV

International Growth Stock Trust Series NAV

   

Strategic Income Opportunities Trust Series I

International Small Company Trust Series I

   

Strategic Income Opportunities Trust Series NAV

International Small Company Trust Series NAV

   

Total Bond Market Series Trust NAV

International Value Trust Series I

   

Total Stock Market Index Trust Series I

International Value Trust Series NAV

   

Total Stock Market Index Trust Series NAV

Investment Quality Bond Trust Series I

   

Ultra Short Term Bond Trust Series I

Investment Quality Bond Trust Series NAV

   

Ultra Short Term Bond Trust Series NAV

Lifestyle Aggressive Portfolio Series NAV

   

Utilities Trust Series I

Lifestyle Balanced Portfolio Series NAV

   

Utilities Trust Series NAV

 

5

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     500 Index Fund
Series NAV		      Active Bond Trust
Series I		      Active Bond Trust
Series NAV		      American Asset
Allocation Trust
Series I		      American Global
Growth Trust
Series I		      American Growth
Trust Series I		  

Total Assets

                  

Investments at fair value

    $ 333,001,865      $ 7,042,758      $ 25,502,030      $ 128,553,201      $ 12,930,201      $ 78,465,488  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      6,703,776        296,649        328,792        6,965,681        694,178        2,307,102  

Unit value

    $ 49.67      $ 23.74      $ 77.56      $ 18.46      $ 18.63      $ 34.01  

Shares

      11,174,559        764,686        2,765,947        10,857,534        945,190        4,741,117  

Cost

    $ 288,316,057      $ 7,424,358      $ 26,557,795      $ 150,011,688      $ 14,523,472      $ 92,757,643  

 

See accompanying notes.

 

6

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     American Growth-
Income Trust
Series I		      American
International Trust
Series I		      Blue Chip Growth
Trust Series I		      Blue Chip Growth
Trust Series NAV		      Capital Appreciation
Trust Series I		      Capital Appreciation
Trust Series NAV		  

Total Assets

                  

Investments at fair value

    $ 100,731,704      $ 51,790,365      $ 38,127,316      $ 91,092,320      $ 26,689,621      $ 32,748,489  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      3,246,275        2,328,343        487,988        477,819        721,435        900,078  

Unit value

    $ 31.03      $ 22.24      $ 78.13      $ 190.64      $ 37.00      $ 36.38  

Shares

      6,702,043        2,930,977        1,231,502        2,941,308        2,207,578        2,704,252  

Cost

    $ 117,948,960      $ 55,347,075      $ 39,250,932      $ 95,287,674      $ 30,722,155      $ 37,415,398  

 

See accompanying notes.

 

7

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Capital Appreciation
Value Trust Series I		      Capital Appreciation
Value Trust
Series NAV		      Core Bond Trust
Series I		      Core Bond Trust
Series NAV		      Emerging Markets
Value Trust Series I		      Emerging Markets
Value Trust
Series NAV		  

Total Assets

                  

Investments at fair value

    $ 2,490,868      $ 70,628,944      $ 15,421,146      $ 61,160,428      $ 5,070,429      $ 58,882,982  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      108,256        3,057,942        718,876        3,545,325        328,312        4,738,415  

Unit value

    $ 23.01      $ 23.10      $ 21.45      $ 17.25      $ 15.44      $ 12.43  

Shares

      228,101        6,485,670        1,216,179        4,846,310        567,797        6,601,231  

Cost

    $ 2,644,801      $ 76,027,144      $ 16,289,420      $ 63,807,353      $ 5,528,135      $ 62,804,915  

 

See accompanying notes.

 

8

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Equity Income Trust
Series I		      Equity Income Trust
Series NAV		      Financial Industries
Trust Series I		      Financial Industries
Trust Series NAV		      Fundamental All
Cap Core Trust
Series I		      Fundamental All
Cap Core Trust
Series NAV		  

Total Assets

                  

Investments at fair value

    $ 33,645,179      $ 67,422,019      $ 2,373,145      $ 9,396,282      $ 1,023,257      $ 18,813,483  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      627,663        1,256,507        87,596        287,342        22,449        693,925  

Unit value

    $ 53.60      $ 53.66      $ 27.09      $ 32.70      $ 45.58      $ 27.11  

Shares

      2,464,848        4,964,803        199,424        790,933        52,101        953,064  

Cost

    $ 39,676,933      $ 82,408,651      $ 2,712,600      $ 10,517,675      $ 1,194,431      $ 20,433,998  

 

See accompanying notes.

 

9

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Fundamental Large
Cap Value Trust
Series I		      Fundamental Large
Cap Value Trust
Series NAV		      Global Bond Trust
Series I		      Global Bond Trust
Series NAV		      Global Trust Series I      Global Trust
Series NAV		  

Total Assets

                  

Investments at fair value

    $ 27,663,208      $ 43,430,636      $ 4,624,211      $ 36,211,924      $ 9,423,692      $ 26,552,697  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      918,948        2,045,478        141,954        1,105,573        283,556        1,474,569  

Unit value

    $ 30.10      $ 21.23      $ 32.58      $ 32.75      $ 33.23      $ 18.01  

Shares

      1,579,852        2,480,333        374,734        2,944,059        512,994        1,447,013  

Cost

    $ 28,045,766      $ 45,766,293      $ 4,792,361      $ 37,348,927      $ 10,199,162      $ 28,736,423  

 

See accompanying notes.

 

10

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Health Sciences
Trust Series I		      Health Sciences
Trust Series NAV		      High Yield Trust
Series I		      High Yield Trust
Series NAV		      International Equity
Index Series I		      International Equity
Index Series NAV		  

Total Assets

                  

Investments at fair value

    $ 11,662,591      $ 44,386,595      $ 11,108,158      $ 30,596,872      $ 11,271,048      $ 74,077,400  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      130,547        635,945        312,208        1,300,918        905,382        1,514,607  

Unit value

    $ 89.34      $ 69.80      $ 35.58      $ 23.52      $ 12.45      $ 48.91  

Shares

      509,952        1,910,745        2,290,342        6,414,439        729,990        4,800,868  

Cost

    $ 13,228,951      $ 50,832,291      $ 12,857,399      $ 34,124,837      $ 11,870,363      $ 78,552,850  

 

See accompanying notes.

 

11

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     International Growth
Stock Trust Series I		      International Growth
Stock Trust
Series NAV		      International Small
Company Trust
Series I		      International Small
Company Trust
Series NAV		      International Value
Trust Series I		      International Value
Trust Series NAV		  

Total Assets

                  

Investments at fair value

    $ 2,334,384      $ 15,098,188      $ 5,369,742      $ 25,467,504      $ 19,400,087      $ 37,995,140  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      186,877        1,205,192        327,896        1,547,747        786,720        2,383,362  

Unit value

    $ 12.49      $ 12.53      $ 16.38      $ 16.45      $ 24.66      $ 15.94  

Shares

      154,288        997,897        427,868        2,027,668        1,638,521        3,233,629  

Cost

    $ 2,580,006      $ 16,872,573      $ 5,805,417      $ 26,864,583      $ 20,797,115      $ 41,643,996  

 

See accompanying notes.

 

12

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Investment Quality
Bond Trust Series I		      Investment Quality
Bond Trust
Series NAV		      Lifestyle Aggressive
Portfolio
Series NAV		      Lifestyle Balanced
Portfolio
Series NAV		      Lifestyle
Conservative
Portfolio
Series NAV		      Lifestyle Growth
Portfolio Series I		  

Total Assets

                  

Investments at fair value

    $ 9,363,363      $ 17,772,335      $ 10,528,197      $ 71,880,403      $ 4,235,100      $ 1,107,035  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      257,684        1,033,066        813,597        5,873,257        364,449        99,550  

Unit value

    $ 36.34      $ 17.20      $ 12.94      $ 12.24      $ 11.62      $ 11.12  

Shares

      876,719        1,668,764        796,384        5,231,470        334,526        74,498  

Cost

    $ 10,069,968      $ 18,611,479      $ 11,699,382      $ 74,950,183      $ 4,464,184      $ 1,207,075  

 

See accompanying notes.

 

13

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Lifestyle Growth
Portfolio
Series NAV		      Lifestyle Moderate
Portfolio
Series NAV		      M Capital
Appreciation		      M International
Equity		      M Large Cap
Growth		      M Large Cap Value  

Total Assets

                  

Investments at fair value

    $ 306,635,898      $ 21,382,122      $ 13,342,921      $ 7,896,939      $ 15,767,119      $ 12,334,509  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      24,249,413        1,776,296        135,729        252,594        225,980        469,580  

Unit value

    $ 12.65      $ 12.04      $ 98.31      $ 31.26      $ 69.77      $ 26.27  

Shares

      20,648,882        1,598,066        631,169        744,994        690,027        1,115,236  

Cost

    $ 326,198,027      $ 22,403,921      $ 17,755,111      $ 9,012,400      $ 16,503,471      $ 14,583,813  

 

See accompanying notes.

 

14

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Managed Volatility
Aggressive Portfolio
Series I		      Managed Volatility
Aggressive Portfolio
Series NAV		      Managed Volatility
Balanced Portfolio
Series I		      Managed Volatility
Balanced Portfolio
Series NAV		      Managed Volatility
Conservative
Portfolio Series I		      Managed Volatility
Conservative
Portfolio
Series NAV		  

Total Assets

                  

Investments at fair value

    $ 12,566,408      $ 174,787,116      $ 52,410,803      $ 416,483,491      $ 2,869,998      $ 33,036,046  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      373,736        8,654,592        1,333,343        21,264,076        74,140        1,822,078  

Unit value

    $ 33.62      $ 20.20      $ 39.31      $ 19.59      $ 38.71      $ 18.13  

Shares

      1,260,422        17,513,739        4,667,035        36,987,877        270,499        3,107,812  

Cost

    $ 12,803,591      $ 172,447,866      $ 57,817,734      $ 466,738,444      $ 3,213,211      $ 36,755,055  

 

See accompanying notes.

 

15

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Managed Volatility
Growth Portfolio
Series I		      Managed Volatility
Growth Portfolio
Series NAV		      Managed Volatility
Moderate Portfolio
Series I		      Managed Volatility
Moderate Portfolio
Series NAV		      Mid Cap Index Trust
Series I		      Mid Cap Index
Trust Series NAV		  

Total Assets

                  

Investments at fair value

    $ 65,070,901      $ 581,695,848      $ 12,647,009      $ 91,292,481      $ 23,799,503      $ 60,186,882  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      1,771,096        29,489,739        314,253        4,705,951        471,397        1,815,238  

Unit value

    $ 36.74      $ 19.73      $ 40.24      $ 19.40      $ 50.49      $ 33.16  

Shares

      5,333,680        47,640,938        1,166,698        8,414,054        1,263,914        3,198,028  

Cost

    $ 65,626,948      $ 613,648,347      $ 14,752,358      $ 104,882,753      $ 27,462,936      $ 69,439,126  

 

See accompanying notes.

 

16

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Mid Cap Stock Trust
Series I		      Mid Cap Stock
Trust Series NAV		      Mid Value Trust
Series I		      Mid Value Trust
Series NAV		      Money Market Trust
Series I		      Money-Market Trust
Series NAV		  

Total Assets

                  

Investments at fair value

    $ 19,577,151      $ 34,453,344      $ 10,920,765      $ 26,966,814      $ 29,832,556      $ 102,374,698  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      440,965        355,971        353,220        566,264        1,184,300        10,002,508  

Unit value

    $ 44.40      $ 96.79      $ 30.92      $ 47.62      $ 25.19      $ 10.23  

Shares

      1,239,845        2,153,334        1,153,196        2,862,719        29,832,556        102,374,698  

Cost

    $ 20,491,058      $ 37,078,458      $ 13,654,511      $ 32,858,396      $ 29,832,556      $ 102,374,698  

 

See accompanying notes.

 

17

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     PIMCO All Asset      Real Estate
Securities Trust
Series I		      Real Estate
Securities Trust
Series NAV		      Science &
Technology Trust
Series I		      Science &
Technology Trust
Series NAV		      Select Bond Trust
Series I (a)		  

Total Assets

                  

Investments at fair value

    $ 32,593,928      $ 22,168,528      $ 44,153,453      $ 21,429,170      $ 31,797,696      $ 3,068,856  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      1,851,468        118,553        281,700        389,756        728,285        257,968  

Unit value

    $ 17.60      $ 186.99      $ 156.74      $ 54.98      $ 43.66      $ 11.90  

Shares

      3,220,744        1,184,216        2,372,566        830,588        1,218,303        236,248  

Cost

    $ 34,551,429      $ 15,936,428      $ 41,539,227      $ 20,893,636      $ 32,786,129      $ 3,223,551  

 

(a)

Renamed on April 30, 2018. Previously known as Bond Trust Series I.

 

See accompanying notes.

 

18

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Select Bond Trust
Series NAV (b)		      Short Term
Government Income
Trust Series I		      Short Term
Government Income
Trust Series NAV		      Small Cap Index
Trust Series I		      Small Cap Index
Trust Series NAV		      Small Cap
Opportunities Trust
Series I		  

Total Assets

                  

Investments at fair value

    $ 24,089,006      $ 5,314,940      $ 21,750,977      $ 9,148,380      $ 33,259,091      $ 25,668,881  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      2,018,413        487,428        1,985,657        240,490        1,093,286        599,954  

Unit value

    $ 11.93      $ 10.90      $ 10.95      $ 38.04      $ 30.42      $ 42.78  

Shares

      1,855,856        447,762        1,832,433        684,759        2,485,732        1,147,469  

Cost

    $ 25,151,508      $ 5,501,965      $ 22,435,314      $ 10,379,060      $ 37,153,317      $ 33,797,306  

 

(b)

Renamed on April 30, 2018. Previously known as Bond Trust Series NAV.

 

See accompanying notes.

 

19

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Small Cap
Opportunities Trust
Series NAV		      Small Cap Stock
Trust Series I (c)		      Small Cap Stock
Trust Series NAV (d)		      Small Cap Value
Trust Series I		      Small Cap Value
Trust Series NAV		      Small Company
Value Trust Series I		  

Total Assets

                  

Investments at fair value

    $ 15,784,091      $ 1,989,815      $ 20,749,259      $ 2,813,921      $ 30,610,463      $ 11,493,574  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      747,491        64,404        565,112        104,188        402,147        276,659  

Unit value

    $ 21.12      $ 30.90      $ 36.72      $ 27.01      $ 76.12      $ 41.54  

Shares

      710,036        219,143        2,257,808        180,380        1,969,785        691,551  

Cost

    $ 21,202,472      $ 2,441,499      $ 22,450,034      $ 3,730,379      $ 40,270,177      $ 13,745,039  

 

(c)

Renamed on April 30, 2018. Previously known as Small Cap Growth Trust Series I.

(d)

Renamed on April 30, 2018. Previously known as Small Cap Growth Trust Series NAV.

 

See accompanying notes.

 

20

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Small Company
Value Trust
Series NAV		      Strategic Income
Opportunities Trust
Series I		      Strategic Income
Opportunities Trust
Series NAV		      Total Bond Market
Series Trust NAV		      Total Stock Market
Index Trust Series I		      Total Stock Market
Index Trust
Series NAV		  

Total Assets

                  

Investments at fair value

    $ 25,360,899      $ 7,669,614      $ 32,957,452      $ 26,819,207      $ 14,003,943      $ 57,849,461  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      915,140        278,362        1,609,612        1,071,752        460,603        570,309  

Unit value

    $ 27.71      $ 27.55      $ 20.48      $ 25.02      $ 30.40      $ 101.44  

Shares

      1,530,531        612,100        2,638,707        2,733,864        692,579        2,862,418  

Cost

    $ 31,670,811      $ 8,250,422      $ 35,484,967      $ 28,077,523      $ 13,954,530      $ 56,380,896  

 

See accompanying notes.

 

21

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2018

 

     Ultra Short Term
Bond Trust Series I		      Ultra Short Term
Bond Trust
Series NAV		      Utilities Trust
Series I		      Utilities Trust
Series NAV		  

Total Assets

            

Investments at fair value

    $ 1,312,396      $ 6,726,674      $ 3,646,386      $ 15,956,644  
  

 

 

     

 

 

     

 

 

     

 

 

  

Units outstanding

      127,331        649,459        88,920        485,301  

Unit value

    $ 10.31      $ 10.36      $ 41.01      $ 32.88  

Shares

      115,426        591,096        264,614        1,159,640  

Cost

    $ 1,318,017      $ 6,821,051      $ 3,547,571      $ 16,156,486  

 

See accompanying notes.

 

22

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     500 Index Fund Series NAV     Active Bond Trust Series I     Active Bond Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 5,037,431     $ 5,711,380     $ 226,185     $ 250,045     $ 885,279     $ 894,812  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      5,037,431       5,711,380       226,185       250,045       885,279       894,812  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      5,673,350       4,034,345       —         —         —         —    

Net realized gain (loss)

      16,768,797       12,647,181       (64,251 )      (57,535 )      (581,664 )      (99,259 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      22,442,147       16,681,526       (64,251 )      (57,535 )      (581,664 )      (99,259 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (43,846,904 )      38,637,593       (192,864 )      153,928       (440,952 )      338,620  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (16,367,326 )      61,030,499       (30,930 )      346,438       (137,337 )      1,134,173  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      22,284,725       19,984,225       222,137       219,445       2,603,223       2,048,551  

Transfers between sub-accounts and the company

      6,419,093       18,073,465       1,261,679       (787,187 )      623,217       2,763,558  

Transfers on general account policy loans

      (1,322,685 )      (1,764,413 )      12,818       (29,393 )      (152,369 )      (148,499 ) 

Withdrawals

      (12,204,412 )      (8,342,573 )      (453,778 )      (254,198 )      (2,502,654 )      (598,612 ) 

Annual contract fee

      (14,529,288 )      (13,513,071 )      (440,840 )      (514,515 )      (1,370,335 )      (1,126,575 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      647,433       14,437,633       602,016       (1,365,848 )      (798,918 )      2,938,423  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (15,719,893 )      75,468,132       571,086       (1,019,410 )      (936,255 )      4,072,596  

Net assets at beginning of period

      348,721,758       273,253,626       6,471,672       7,491,082       26,438,285       22,365,689  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 333,001,865     $ 348,721,758     $ 7,042,758     $ 6,471,672     $ 25,502,030     $ 26,438,285  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      6,784,125       6,586,120       270,953       328,818       338,984       300,795  

Units issued

      682,933       878,637       66,853       25,745       113,905       86,290  

Units redeemed

      (763,282 )      (680,632 )      (41,157 )      (83,610 )      (124,097 )      (48,101 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      6,703,776       6,784,125       296,649       270,953       328,792       338,984  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

23

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     American Asset Allocation Trust Series I     American Global Growth Trust Series I     American Growth Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 2,265,816     $ 1,496,880     $ 100,168     $ 34,294     $ 327,187     $ 288,948  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      2,265,816       1,496,880       100,168       34,294       327,187       288,948  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      15,523,189       7,889,162       878,313       1,071,185       15,148,105       11,908,631  

Net realized gain (loss)

      683,660       1,035,280       115,596       64,250       4,234,615       3,310,844  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      16,206,849       8,924,442       993,909       1,135,435       19,382,720       15,219,475  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (25,203,828 )      6,336,459       (2,461,274 )      1,933,790       (20,056,793 )      3,249,825  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (6,731,163 )      16,757,781       (1,367,197 )      3,103,519       (346,886 )      18,758,248  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      11,541,651       9,932,355       1,208,830       995,448       3,999,413       4,132,126  

Transfers between sub-accounts and the company

      6,598,350       10,149,892       (821,041 )      2,435,564       942,251       468,940  

Transfers on general account policy loans

      (64,813 )      (108,782 )      296,861       (192,450 )      (1,245,403 )      (629,826 ) 

Withdrawals

      (3,941,812 )      (2,669,136 )      (533,369 )      (248,851 )      (5,268,017 )      (2,405,391 ) 

Annual contract fee

      (7,426,245 )      (6,538,270 )      (667,487 )      (517,980 )      (3,401,694 )      (3,209,403 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      6,707,131       10,766,059       (516,206 )      2,471,731       (4,973,450 )      (1,643,554 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (24,032 )      27,523,840       (1,883,403 )      5,575,250       (5,320,336 )      17,114,694  

Net assets at beginning of period

      128,577,233       101,053,393       14,813,604       9,238,354       83,785,824       66,671,130  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 128,553,201     $ 128,577,233     $ 12,930,201     $ 14,813,604     $ 78,465,488     $ 83,785,824  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      6,625,088       6,029,037       720,753       588,444       2,411,606       2,456,826  

Units issued

      919,612       1,022,015       184,457       209,830       293,414       279,811  

Units redeemed

      (579,019 )      (425,964 )      (211,032 )      (77,521 )      (397,918 )      (325,031 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      6,965,681       6,625,088       694,178       720,753       2,307,102       2,411,606  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

24

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     American Growth-Income Trust Series I     American International Trust Series I     Blue Chip Growth Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 1,572,588     $ 1,150,101     $ 1,606,847     $ 465,614     $ 10,497     $ 28,447  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      1,572,588       1,150,101       1,606,847       465,614       10,497       28,447  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      13,510,112       17,656,554       2,196,402       2,611,757       5,949,164       2,644,941  

Net realized gain (loss)

      2,166,502       2,708,695       2,565,866       1,661,395       3,209,476       3,561,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      15,676,614       20,365,249       4,762,268       4,273,152       9,158,640       6,205,941  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (18,762,076 )      (707,099 )      (14,554,241 )      8,356,818       (7,788,916 )      5,886,516  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (1,512,874 )      20,808,251       (8,185,126 )      13,095,584       1,380,221       12,120,904  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      5,015,587       5,041,278       3,201,458       3,003,430       1,006,166       982,594  

Transfers between sub-accounts and the company

      1,064,109       2,282,237       7,174,537       1,273,365       (1,739,699 )      (1,412,508 ) 

Transfers on general account policy loans

      (547,881 )      (616,998 )      (491,820 )      (95,032 )      (262,059 )      (76,906 ) 

Withdrawals

      (12,318,157 )      (3,649,164 )      (3,586,402 )      (1,080,357 )      (2,396,663 )      (1,402,018 ) 

Annual contract fee

      (4,827,959 )      (4,510,410 )      (1,900,849 )      (1,726,754 )      (2,438,244 )      (2,244,354 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (11,614,301 )      (1,453,057 )      4,396,924       1,374,652       (5,830,499 )      (4,153,192 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (13,127,175 )      19,355,194       (3,788,202 )      14,470,236       (4,450,278 )      7,967,712  

Net assets at beginning of period

      113,858,879       94,503,685       55,578,567       41,108,331       42,577,594       34,609,882  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 100,731,704     $ 113,858,879     $ 51,790,365     $ 55,578,567     $ 38,127,316     $ 42,577,594  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      3,585,179       3,611,722       2,135,269       2,057,878       555,682       615,567  

Units issued

      453,570       306,804       600,586       322,394       26,482       40,017  

Units redeemed

      (792,474 )      (333,347 )      (407,512 )      (245,003 )      (94,176 )      (99,902 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      3,246,275       3,585,179       2,328,343       2,135,269       487,988       555,682  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

25

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Blue Chip Growth Trust Series NAV     Capital Appreciation Trust Series I     Capital Appreciation Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 56,542     $ 87,844     $ 85,297     $ 17,132     $ 130,544     $ 29,311  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      56,542       87,844       85,297       17,132       130,544       29,311  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      13,199,240       5,202,391       5,477,150       2,275,506       6,498,498       2,343,805  

Net realized gain (loss)

      2,213,826       1,794,684       1,291,799       872,590       54,829       (82,064 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      15,413,066       6,997,075       6,768,949       3,148,096       6,553,327       2,261,741  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (13,892,254 )      15,807,053       (6,805,370 )      5,167,488       (7,041,921 )      5,897,984  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      1,577,354       22,891,972       48,876       8,332,716       (358,050 )      8,189,036  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      7,264,327       6,452,638       748,447       760,092       2,686,447       2,185,308  

Transfers between sub-accounts and the company

      4,934,004       1,722,247       (309,419 )      (322,108 )      307,195       1,568,740  

Transfers on general account policy loans

      (708,281 )      (831,753 )      (32,078 )      19,929       (162,507 )      (88,606 ) 

Withdrawals

      (4,767,177 )      (3,084,897 )      (1,653,860 )      (1,390,521 )      (531,445 )      (482,652 ) 

Annual contract fee

      (3,858,315 )      (3,138,590 )      (1,608,524 )      (1,487,724 )      (1,327,741 )      (1,039,379 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      2,864,558       1,119,645       (2,855,434 )      (2,420,332 )      971,949       2,143,411  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      4,441,912       24,011,617       (2,806,558 )      5,912,384       613,899       10,332,447  

Net assets at beginning of period

      86,650,408       62,638,791       29,496,179       23,583,795       32,134,590       21,802,143  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 91,092,320     $ 86,650,408     $ 26,689,621     $ 29,496,179     $ 32,748,489     $ 32,134,590  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      463,766       457,079       790,899       863,372       876,826       812,101  

Units issued

      76,941       71,067       81,810       15,756       187,807       183,639  

Units redeemed

      (62,888 )      (64,380 )      (151,274 )      (88,229 )      (164,555 )      (118,914 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      477,819       463,766       721,435       790,899       900,078       876,826  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

26

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Capital Appreciation Value Trust Series I     Capital Appreciation Value Trust Series NAV     Core Bond Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 55,748     $ 50,893     $ 1,643,512     $ 1,002,782     $ 388,181     $ 371,107  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      55,748       50,893       1,643,512       1,002,782       388,181       371,107  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      189,718       167,171       5,336,424       3,078,055       —         224,099  

Net realized gain (loss)

      19,417       65,725       (534,658 )      (245,204 )      (129,676 )      (34,669 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      209,135       232,896       4,801,766       2,832,851       (129,676 )      189,430  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (247,969 )      195,648       (6,163,385 )      4,953,470       (385,313 )      29,813  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      16,914       479,437       281,893       8,789,103       (126,808 )      590,350  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      208,067       195,518       6,331,069       6,697,034       462,070       494,587  

Transfers between sub-accounts and the company

      23,981       534,045       (152,919 )      5,557,007       (489,494 )      170,416  

Transfers on general account policy loans

      (253 )      (18,980 )      (309,510 )      (317,483 )      (46,088 )      (147,159 ) 

Withdrawals

      (355,215 )      (728,985 )      (3,461,609 )      (615,682 )      (1,024,447 )      (881,342 ) 

Annual contract fee

      (265,968 )      (218,192 )      (3,361,019 )      (2,947,035 )      (707,083 )      (753,011 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (389,388 )      (236,594 )      (953,988 )      8,373,841       (1,805,042 )      (1,116,509 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (372,474 )      242,843       (672,095 )      17,162,944       (1,931,850 )      (526,159 ) 

Net assets at beginning of period

      2,863,342       2,620,499       71,301,039       54,138,095       17,352,996       17,879,155  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 2,490,868     $ 2,863,342     $ 70,628,944     $ 71,301,039     $ 15,421,146     $ 17,352,996  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      124,935       131,659       3,100,817       2,710,774       804,188       856,789  

Units issued

      11,819       40,993       428,448       774,602       22,401       34,897  

Units redeemed

      (28,498 )      (47,717 )      (471,323 )      (384,559 )      (107,713 )      (87,498 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      108,256       124,935       3,057,942       3,100,817       718,876       804,188  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

27

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Core Bond Trust Series NAV     Emerging Markets Value Trust Series I     Emerging Markets Value Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 1,601,210     $ 1,441,432     $ 147,359     $ 77,461     $ 1,728,428     $ 834,282  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      1,601,210       1,441,432       147,359       77,461       1,728,428       834,282  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      —         837,460       —         —         —         —    

Net realized gain (loss)

      (852,944 )      (139,208 )      164,479       (33,023 )      709,137       (66,270 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      (852,944 )      698,252       164,479       (33,023 )      709,137       (66,270 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (1,143,167 )      16,954       (1,100,305 )      932,232       (11,539,411 )      10,107,496  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (394,901 )      2,156,638       (788,467 )      976,670       (9,101,846 )      10,875,508  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      5,745,330       5,583,075       162,992       87,934       5,594,978       3,762,337  

Transfers between sub-accounts and the company

      (3,343,220 )      3,725,396       297,718       2,775,692       4,829,135       20,362,870  

Transfers on general account policy loans

      (463,319 )      (536,116 )      (59,485 )      10,966       (317,597 )      (453,514 ) 

Withdrawals

      (4,731,404 )      (1,766,691 )      (549,129 )      (208,261 )      (1,992,041 )      (683,885 ) 

Annual contract fee

      (2,854,592 )      (2,888,247 )      (217,935 )      (138,941 )      (2,247,249 )      (1,478,651 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (5,647,205 )      4,117,417       (365,839 )      2,527,390       5,867,226       21,509,157  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (6,042,106 )      6,274,055       (1,154,306 )      3,504,060       (3,234,620 )      32,384,665  

Net assets at beginning of period

      67,202,534       60,928,479       6,224,735       2,720,675       62,117,602       29,732,937  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 61,160,428     $ 67,202,534     $ 5,070,429     $ 6,224,735     $ 58,882,982     $ 62,117,602  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      3,874,428       3,634,667       348,258       201,982       4,324,940       2,746,637  

Units issued

      698,862       768,494       74,570       176,088       984,793       1,914,894  

Units redeemed

      (1,027,965 )      (528,733 )      (94,516 )      (29,812 )      (571,318 )      (336,591 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      3,545,325       3,874,428       328,312       348,258       4,738,415       4,324,940  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

28

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Equity Income Trust Series I     Equity Income Trust Series NAV     Financial Industries Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 718,771     $ 939,507     $ 1,455,981     $ 1,657,104     $ 33,466     $ 37,589  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      718,771       939,507       1,455,981       1,657,104       33,466       37,589  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      4,822,496       3,113,327       9,355,040       5,303,333       181,653       —    

Net realized gain (loss)

      1,197,812       1,487,756       (10,711 )      612,397       114,810       123,722  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      6,020,308       4,601,083       9,344,329       5,915,730       296,463       123,722  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (10,307,500 )      778,827       (17,861,888 )      3,284,904       (706,857 )      384,558  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (3,568,421 )      6,319,417       (7,061,578 )      10,857,738       (376,928 )      545,869  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      1,182,990       1,156,003       5,542,972       4,967,458       52,399       71,001  

Transfers between sub-accounts and the company

      (2,775,032 )      (495,831 )      (542,818 )      (3,807,025 )      (399,783 )      (1,425,887 ) 

Transfers on general account policy loans

      (279,166 )      (199,383 )      (922,857 )      (631,268 )      (64,909 )      (6,508 ) 

Withdrawals

      (2,150,265 )      (1,514,758 )      (2,298,448 )      (2,818,743 )      (138,815 )      (134,508 ) 

Annual contract fee

      (2,196,870 )      (2,293,085 )      (2,585,972 )      (2,616,215 )      (109,752 )      (106,648 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (6,218,343 )      (3,347,054 )      (807,123 )      (4,905,793 )      (660,860 )      (1,602,550 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (9,786,764 )      2,972,363       (7,868,701 )      5,951,945       (1,037,788 )      (1,056,681 ) 

Net assets at beginning of period

      43,431,943       40,459,580       75,290,720       69,338,775       3,410,933       4,467,614  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 33,645,179     $ 43,431,943     $ 67,422,019     $ 75,290,720     $ 2,373,145     $ 3,410,933  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      732,612       793,634       1,269,637       1,359,594       107,658       162,550  

Units issued

      11,466       12,575       146,171       135,051       4,388       51,000  

Units redeemed

      (116,415 )      (73,597 )      (159,301 )      (225,008 )      (24,450 )      (105,892 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      627,663       732,612       1,256,507       1,269,637       87,596       107,658  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

29

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Financial Industries Trust Series NAV     Fundamental All Cap Core Trust Series I     Fundamental All Cap Core Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 138,748     $ 139,351     $ 5,438     $ 8,996     $ 100,947     $ 138,907  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      138,748       139,351       5,438       8,996       100,947       138,907  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      747,989       —         170,859       28,878       2,679,547       413,147  

Net realized gain (loss)

      518,211       (159,999 )      29,226       60,743       984,346       855,039  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      1,266,200       (159,999 )      200,085       89,621       3,663,893       1,268,186  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (3,025,683 )      1,551,536       (358,856 )      191,922       (6,596,045 )      2,773,079  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (1,620,735 )      1,530,888       (153,333 )      290,539       (2,831,205 )      4,180,172  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      703,019       687,908       36,901       17,809       1,131,371       1,001,752  

Transfers between sub-accounts and the company

      (651,977 )      1,524,089       (35,498 )      209,434       3,276,766       937,274  

Transfers on general account policy loans

      489,194       (87,294 )      (27,181 )      (123,622 )      (198,254 )      (222,227 ) 

Withdrawals

      (997,830 )      (1,237,376 )      (137,849 )      (15,293 )      (1,010,510 )      (506,902 ) 

Annual contract fee

      (443,593 )      (426,657 )      (66,499 )      (56,818 )      (842,339 )      (737,887 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (901,187 )      460,670       (230,126 )      31,510       2,357,034       472,010  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (2,521,922 )      1,991,558       (383,459 )      322,049       (474,171 )      4,652,182  

Net assets at beginning of period

      11,918,204       9,926,646       1,406,716       1,084,667       19,287,654       14,635,472  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 9,396,282     $ 11,918,204     $ 1,023,257     $ 1,406,716     $ 18,813,483     $ 19,287,654  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      312,059       299,659       26,801       26,389       617,770       598,924  

Units issued

      58,007       120,831       2,029       5,997       180,337       117,803  

Units redeemed

      (82,724 )      (108,431 )      (6,381 )      (5,585 )      (104,182 )      (98,957 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      287,342       312,059       22,449       26,801       693,925       617,770  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

30

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Fundamental Large Cap Value Trust Series I     Fundamental Large Cap Value Trust
Series NAV		     Global Bond Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 376,214     $ 584,681     $ 593,846     $ 753,430     $ 125,983     $ 110,786  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      376,214       584,681       593,846       753,430       125,983       110,786  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      —         —         —         —         —         —    

Net realized gain (loss)

      642,411       741,506       1,215,245       940,937       (41,591 )      (40,256 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      642,411       741,506       1,215,245       940,937       (41,591 )      (40,256 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (6,811,928 )      4,517,759       (10,730,187 )      5,435,595       (173,312 )      352,721  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (5,793,303 )      5,843,946       (8,921,096 )      7,129,962       (88,920 )      423,251  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      1,079,471       1,113,460       3,742,665       3,576,699       143,729       165,068  

Transfers between sub-accounts and the company

      (335,276 )      (1,674,588 )      4,207,284       (354,802 )      236,952       (183,677 ) 

Transfers on general account policy loans

      (178,914 )      (708,171 )      (188,578 )      (249,901 )      (34,415 )      248  

Withdrawals

      (2,233,798 )      (1,515,486 )      (1,557,662 )      (931,572 )      (290,373 )      (426,217 ) 

Annual contract fee

      (1,925,392 )      (2,050,846 )      (1,819,165 )      (1,729,783 )      (246,799 )      (242,700 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (3,593,909 )      (4,835,631 )      4,384,544       310,641       (190,906 )      (687,278 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (9,387,212 )      1,008,315       (4,536,552 )      7,440,603       (279,826 )      (264,027 ) 

Net assets at beginning of period

      37,050,420       36,042,105       47,967,188       40,526,585       4,904,037       5,168,064  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 27,663,208     $ 37,050,420     $ 43,430,636     $ 47,967,188     $ 4,624,211     $ 4,904,037  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      1,021,137       1,166,491       1,874,453       1,861,460       147,690       169,268  

Units issued

      20,531       49,551       449,839       271,449       11,797       8,635  

Units redeemed

      (122,720 )      (194,905 )      (278,814 )      (258,456 )      (17,533 )      (30,213 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      918,948       1,021,137       2,045,478       1,874,453       141,954       147,690  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

31

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Global Bond Trust Series NAV     Global Trust Series I     Global Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 963,132     $ 665,456     $ 200,603     $ 221,883     $ 580,169     $ 588,196  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      963,132       665,456       200,603       221,883       580,169       588,196  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      —         —         —         —         —         1  

Net realized gain (loss)

      (131,912 )      (102,305 )      275,931       432,278       314,032       136,423  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      (131,912 )      (102,305 )      275,931       432,278       314,032       136,424  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (1,597,515 )      1,759,496       (2,069,877 )      1,348,482       (5,400,656 )      4,431,979  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (766,295 )      2,322,647       (1,593,343 )      2,002,643       (4,506,455 )      5,156,599  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      3,585,555       2,810,402       429,300       421,400       3,058,483       2,928,276  

Transfers between sub-accounts and the company

      7,790,723       (817,908 )      (321,041 )      (230,145 )      (168,139 )      (1,333,425 ) 

Transfers on general account policy loans

      (324,866 )      (152,815 )      9,920       62,822       (398,473 )      (210,767 ) 

Withdrawals

      (1,586,987 )      (995,288 )      (601,733 )      (338,049 )      (2,137,924 )      (968,546 ) 

Annual contract fee

      (1,285,993 )      (1,158,268 )      (675,452 )      (698,431 )      (1,174,090 )      (1,256,341 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      8,178,432       (313,877 )      (1,159,006 )      (782,403 )      (820,143 )      (840,803 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      7,412,137       2,008,770       (2,752,349 )      1,220,240       (5,326,598 )      4,315,796  

Net assets at beginning of period

      28,799,787       26,791,017       12,176,041       10,955,801       31,879,295       27,563,499  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 36,211,924     $ 28,799,787     $ 9,423,692     $ 12,176,041     $ 26,552,697     $ 31,879,295  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      863,987       873,741       313,287       335,109       1,515,103       1,557,573  

Units issued

      382,230       172,201       8,539       14,076       175,803       135,142  

Units redeemed

      (140,644 )      (181,955 )      (38,270 )      (35,898 )      (216,337 )      (177,612 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      1,105,573       863,987       283,556       313,287       1,474,569       1,515,103  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

32

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Health Sciences Trust Series I     Health Sciences Trust Series NAV     High Yield Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ —       $ —       $ —       $ —       $ 805,031     $ 732,906  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      —         —         —         —         805,031       732,906  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      1,200,992       1,320,180       4,496,625       3,944,675       —         —    

Net realized gain (loss)

      (1,619,130 )      (222,125 )      (1,978,452 )      (2,219,892 )      (438,072 )      (140,788 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      (418,138 )      1,098,055       2,518,173       1,724,783       (438,072 )      (140,788 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      479,523       1,657,260       (2,544,336 )      7,480,238       (729,581 )      367,506  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      61,385       2,755,315       (26,163 )      9,205,021       (362,622 )      959,624  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      151,163       157,518       3,882,806       3,209,913       594,723       590,309  

Transfers between sub-accounts and the company

      (1,230,265 )      1,986,951       2,232,818       (772,130 )      152,441       222,479  

Transfers on general account policy loans

      (232,039 )      (24,155 )      (496,061 )      (293,575 )      (32,201 )      (28,153 ) 

Withdrawals

      (510,994 )      (278,801 )      (1,353,871 )      (2,080,527 )      (2,025,058 )      (509,431 ) 

Annual contract fee

      (431,917 )      (411,102 )      (1,900,308 )      (1,731,877 )      (647,943 )      (647,247 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (2,254,052 )      1,430,411       2,365,384       (1,668,196 )      (1,958,038 )      (372,043 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (2,192,667 )      4,185,726       2,339,221       7,536,825       (2,320,660 )      587,581  

Net assets at beginning of period

      13,855,258       9,669,532       42,047,374       34,510,549       13,428,818       12,841,237  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 11,662,591     $ 13,855,258     $ 44,386,595     $ 42,047,374     $ 11,108,158     $ 13,428,818  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      156,156       138,957       607,029       635,767       366,078       376,317  

Units issued

      26,216       29,444       112,345       99,273       27,810       26,503  

Units redeemed

      (51,825 )      (12,245 )      (83,429 )      (128,011 )      (81,680 )      (36,742 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      130,547       156,156       635,945       607,029       312,208       366,078  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

33

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     High Yield Trust Series NAV     International Equity Index Series I     International Equity Index Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 2,037,194     $ 1,733,705     $ 303,410     $ 296,534     $ 1,942,637     $ 1,452,897  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      2,037,194       1,733,705       303,410       296,534       1,942,637       1,452,897  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      —         —         4,444       —         27,148       —    

Net realized gain (loss)

      (695,353 )      (364,035 )      826,845       185,806       984,265       490,985  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      (695,353 )      (364,035 )      831,289       185,806       1,011,413       490,985  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (2,337,463 )      804,573       (3,082,605 )      2,647,954       (14,664,872 )      12,754,444  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (995,622 )      2,174,243       (1,947,906 )      3,130,294       (11,710,822 )      14,698,326  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      2,390,571       2,168,227       388,103       389,327       6,822,961       5,490,149  

Transfers between sub-accounts and the company

      1,142,357       880,486       (676,510 )      1,217,318       10,078,662       6,235,510  

Transfers on general account policy loans

      (193,911 )      (323,699 )      (27,962 )      184,058       (666,297 )      (370,724 ) 

Withdrawals

      (2,219,725 )      (561,629 )      (677,395 )      (641,876 )      (1,126,060 )      (977,343 ) 

Annual contract fee

      (1,365,101 )      (1,317,514 )      (642,208 )      (609,992 )      (2,370,446 )      (2,110,117 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (245,809 )      845,871       (1,635,972 )      538,835       12,738,820       8,267,475  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (1,241,431 )      3,020,114       (3,583,878 )      3,669,129       1,027,998       22,965,801  

Net assets at beginning of period

      31,838,303       28,818,189       14,854,926       11,185,797       73,049,402       50,083,601  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 30,596,872     $ 31,838,303     $ 11,271,048     $ 14,854,926     $ 74,077,400     $ 73,049,402  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      1,312,779       1,276,928       1,025,077       982,629       1,282,976       1,121,042  

Units issued

      351,114       193,755       162,228       136,669       379,809       266,234  

Units redeemed

      (362,975 )      (157,904 )      (281,923 )      (94,221 )      (148,178 )      (104,300 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      1,300,918       1,312,779       905,382       1,025,077       1,514,607       1,282,976  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

34

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     International Growth Stock Trust Series I     International Growth Stock Trust Series NAV     International Small Company Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 43,137     $ 38,471     $ 294,422     $ 241,075     $ 83,307     $ 110,285  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      43,137       38,471       294,422       241,075       83,307       110,285  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      78,095       —         523,214       —         —         —    

Net realized gain (loss)

      105,943       32,809       291,934       558,760       497,085       142,527  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      184,038       32,809       815,148       558,760       497,085       142,527  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (638,025 )      450,079       (3,757,373 )      2,333,544       (1,984,794 )      1,638,245  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (410,850 )      521,359       (2,647,803 )      3,133,379       (1,404,402 )      1,891,057  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      119,724       114,796       1,799,621       1,709,371       228,913       212,050  

Transfers between sub-accounts and the company

      (69,923 )      58,828       (763,909 )      1,436,900       (2,114,774 )      1,966,750  

Transfers on general account policy loans

      5,661       7,923       (302,229 )      (82,038 )      (40,532 )      (48,560 ) 

Withdrawals

      (123,559 )      (8,688 )      (330,371 )      (1,440,999 )      (300,650 )      (200,982 ) 

Annual contract fee

      (103,240 )      (103,529 )      (777,398 )      (729,127 )      (369,628 )      (353,579 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (171,337 )      69,330       (374,286 )      894,107       (2,596,671 )      1,575,679  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (582,187 )      590,689       (3,022,089 )      4,027,486       (4,001,073 )      3,466,736  

Net assets at beginning of period

      2,916,571       2,325,882       18,120,277       14,092,791       9,370,815       5,904,079  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 2,334,384     $ 2,916,571     $ 15,098,188     $ 18,120,277     $ 5,369,742     $ 9,370,815  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      199,797       194,161       1,237,734       1,173,493       457,214       372,932  

Units issued

      44,558       16,613       288,075       348,315       19,059       158,929  

Units redeemed

      (57,478 )      (10,977 )      (320,617 )      (284,074 )      (148,377 )      (74,647 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      186,877       199,797       1,205,192       1,237,734       327,896       457,214  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

35

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     International Small Company Trust
Series NAV		     International Value Trust Series I     International Value Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 366,729     $ 385,080     $ 559,615     $ 445,968     $ 1,101,547     $ 782,354  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      366,729       385,080       559,615       445,968       1,101,547       782,354  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      —         —         —         1       —         —    

Net realized gain (loss)

      832,474       730,406       605,707       898,309       317,284       661,507  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      832,474       730,406       605,707       898,310       317,284       661,507  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (7,542,339 )      5,340,342       (4,680,645 )      2,626,642       (8,054,495 )      4,834,654  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (6,343,136 )      6,455,828       (3,515,323 )      3,970,920       (6,635,664 )      6,278,515  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      2,691,641       2,372,869       859,529       825,461       3,218,705       3,071,554  

Transfers between sub-accounts and the company

      2,560,916       1,351,124       (295,224 )      (1,805,689 )      1,585,483       2,010,648  

Transfers on general account policy loans

      (562,360 )      (315,008 )      (111,543 )      (102,956 )      (182,322 )      (322,976 ) 

Withdrawals

      (1,077,164 )      (511,336 )      (1,385,528 )      (1,339,117 )      (1,617,513 )      (1,890,381 ) 

Annual contract fee

      (976,005 )      (922,931 )      (1,272,632 )      (1,332,290 )      (1,710,832 )      (1,662,654 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      2,637,028       1,974,718       (2,205,398 )      (3,754,591 )      1,293,521       1,206,191  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (3,706,108 )      8,430,546       (5,720,721 )      216,329       (5,342,143 )      7,484,706  

Net assets at beginning of period

      29,173,612       20,743,066       25,120,808       24,904,479       43,337,283       35,852,577  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 25,467,504     $ 29,173,612     $ 19,400,087     $ 25,120,808     $ 37,995,140     $ 43,337,283  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      1,417,050       1,305,742       865,561       1,005,167       2,311,755       2,242,445  

Units issued

      333,388       274,524       38,225       14,845       356,766       397,994  

Units redeemed

      (202,691 )      (163,216 )      (117,066 )      (154,451 )      (285,159 )      (328,684 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      1,547,747       1,417,050       786,720       865,561       2,383,362       2,311,755  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

36

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Investment Quality Bond Trust Series I     Investment Quality Bond Trust Series NAV     Lifestyle Aggressive Portfolio Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 261,359     $ 269,367     $ 492,986     $ 428,844     $ 206,120     $ 103,211  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      261,359       269,367       492,986       428,844       206,120       103,211  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      67,563       43,780       125,585       65,360       244,226       72,398  

Net realized gain (loss)

      (80,384 )      (59,078 )      (183,335 )      (73,793 )      349,254       14,400  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      (12,821 )      (15,298 )      (57,750 )      (8,433 )      593,480       86,798  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (339,982 )      208,500       (539,653 )      229,594       (1,911,253 )      778,153  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (91,444 )      462,569       (104,417 )      650,005       (1,111,653 )      968,162  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      428,416       419,653       1,802,394       1,468,930       349,318       182,022  

Transfers between sub-accounts and the company

      257,225       277,458       590,992       3,031,547       5,162,540       3,263,894  

Transfers on general account policy loans

      (39,833 )      23,604       (107,993 )      (29,372 )      (15 )      —    

Withdrawals

      (657,282 )      (538,358 )      (451,558 )      (367,397 )      13,703       (1,110 ) 

Annual contract fee

      (782,644 )      (805,525 )      (708,609 )      (631,543 )      (352,955 )      (224,304 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (794,118 )      (623,168 )      1,125,226       3,472,165       5,172,591       3,220,502  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (885,562 )      (160,599 )      1,020,809       4,122,170       4,060,938       4,188,664  

Net assets at beginning of period

      10,248,925       10,409,524       16,751,526       12,629,356       6,467,259       2,278,595  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 9,363,363     $ 10,248,925     $ 17,772,335     $ 16,751,526     $ 10,528,197     $ 6,467,259  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      279,745       297,205       967,132       763,224       455,491       195,531  

Units issued

      15,176       18,817       240,435       311,822       524,739       276,502  

Units redeemed

      (37,237 )      (36,277 )      (174,501 )      (107,914 )      (166,633 )      (16,542 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      257,684       279,745       1,033,066       967,132       813,597       455,491  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

37

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Lifestyle Balanced Portfolio Series NAV     Lifestyle Conservative Portfolio Series NAV     Lifestyle Growth Portfolio Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 1,811,925     $ 1,411,601     $ 109,800     $ 91,335     $ 25,889     $ 28,487  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      1,811,925       1,411,601       109,800       91,335       25,889       28,487  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      1,094,715       631,211       37,105       18,298       17,675       4,844  

Net realized gain (loss)

      54,003       (1,412 )      (5,138 )      (588 )      52,493       6,258  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      1,148,718       629,799       31,967       17,710       70,168       11,102  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (6,236,351 )      4,346,975       (212,432 )      104,378       (161,143 )      60,736  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (3,275,708 )      6,388,375       (70,665 )      213,423       (65,086 )      100,325  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      9,946,516       8,362,946       293,080       254,987       20,667       13,925  

Transfers between sub-accounts and the company

      8,027,889       10,403,659       709,920       509,459       (60,088 )      991,297  

Transfers on general account policy loans

      (105,676 )      (101,069 )      6,519       (530 )      (535 )      —    

Withdrawals

      (380,914 )      (474,249 )      (18,579 )      (2,527 )      (303,711 )      25  

Annual contract fee

      (6,980,189 )      (5,620,535 )      (286,213 )      (230,777 )      (64,579 )      (25,940 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      10,507,626       12,570,752       704,727       530,612       (408,246 )      979,307  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      7,231,918       18,959,127       634,062       744,035       (473,332 )      1,079,632  

Net assets at beginning of period

      64,648,485       45,689,358       3,601,038       2,857,003       1,580,367       500,735  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 71,880,403     $ 64,648,485     $ 4,235,100     $ 3,601,038     $ 1,107,035     $ 1,580,367  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      5,050,715       4,011,283       303,928       258,041       133,420       49,096  

Units issued

      1,130,057       1,149,255       80,787       56,119       1,291       92,885  

Units redeemed

      (307,515 )      (109,823 )      (20,266 )      (10,232 )      (35,161 )      (8,561 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      5,873,257       5,050,715       364,449       303,928       99,550       133,420  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

38

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Lifestyle Growth Portfolio Series NAV     Lifestyle Moderate Portfolio Series NAV     M Capital Appreciation  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 7,329,150     $ 5,779,132     $ 548,958     $ 431,952     $ 47,248     $ —    

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      7,329,150       5,779,132       548,958       431,952       47,248       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      4,027,795       1,168,275       293,637       148,264       2,961,184       1,686,620  

Net realized gain (loss)

      1,795,825       677,204       1,063       6,935       227,067       411,131  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      5,823,620       1,845,479       294,700       155,199       3,188,251       2,097,751  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (32,958,950 )      14,237,792       (1,609,032 )      989,953       (5,484,883 )      531,051  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (19,806,180 )      21,862,403       (765,374 )      1,577,104       (2,249,384 )      2,628,802  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      30,201,394       16,750,227       2,647,084       2,238,910       1,113,008       1,115,347  

Transfers between sub-accounts and the company

      8,628,448       187,734,041       2,989,684       3,320,674       (758,854 )      (1,039,100 ) 

Transfers on general account policy loans

      (1,004,392 )      (153,999 )      (10,873 )      3,354       (76,743 )      (17,652 ) 

Withdrawals

      (3,821,848 )      (3,713,064 )      (287,820 )      (99,399 )      (249,201 )      (398,769 ) 

Annual contract fee

      (19,923,715 )      (10,723,926 )      (1,974,244 )      (1,590,863 )      (634,268 )      (598,528 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      14,079,887       189,893,279       3,363,831       3,872,676       (606,058 )      (938,702 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (5,726,293 )      211,755,682       2,598,457       5,449,780       (2,855,442 )      1,690,100  

Net assets at beginning of period

      312,362,191       100,606,509       18,783,665       13,333,885       16,198,363       14,508,263  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 306,635,898     $ 312,362,191     $ 21,382,122     $ 18,783,665     $ 13,342,921     $ 16,198,363  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      23,202,839       8,683,823       1,505,333       1,181,426       141,462       150,799  

Units issued

      2,421,413       15,180,775       391,588       405,328       18,563       16,179  

Units redeemed

      (1,374,839 )      (661,759 )      (120,625 )      (81,421 )      (24,296 )      (25,516 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      24,249,413       23,202,839       1,776,296       1,505,333       135,729       141,462  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

39

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     M International Equity     M Large Cap Growth     M Large Cap Value  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 135,037     $ 226,442     $ —       $ —       $ 203,510     $ 189,930  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      135,037       226,442       —         —         203,510       189,930  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      —         —         1,861,833       429,461       1,005,526       633,669  

Net realized gain (loss)

      317,222       65,914       286,107       424,498       25,235       159,611  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      317,222       65,914       2,147,940       853,959       1,030,761       793,280  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (2,647,034 )      2,495,060       (2,928,577 )      3,846,021       (2,904,153 )      800,631  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (2,194,775 )      2,787,416       (780,637 )      4,699,980       (1,669,882 )      1,783,841  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      723,488       953,692       1,514,517       1,127,387       1,133,321       1,078,909  

Transfers between sub-accounts and the company

      (4,558,420 )      3,675       233,102       (1,336,888 )      200,882       (196,548 ) 

Transfers on general account policy loans

      (39,536 )      (198,129 )      (99,016 )      13,081       (105,300 )      19,830  

Withdrawals

      (238,283 )      (135,894 )      (336,555 )      (396,580 )      (220,384 )      (252,068 ) 

Annual contract fee

      (409,312 )      (479,245 )      (744,360 )      (637,823 )      (613,597 )      (528,740 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (4,522,063 )      144,099       567,688       (1,230,823 )      394,922       121,383  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (6,716,838 )      2,931,515       (212,949 )      3,469,157       (1,274,960 )      1,905,224  

Net assets at beginning of period

      14,613,777       11,682,262       15,980,068       12,510,911       13,609,469       11,704,245  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 7,896,939     $ 14,613,777     $ 15,767,119     $ 15,980,068     $ 12,334,509     $ 13,609,469  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      371,299       368,200       217,690       236,857       455,589       450,559  

Units issued

      39,448       53,455       33,984       22,462       76,810       57,356  

Units redeemed

      (158,153 )      (50,356 )      (25,694 )      (41,629 )      (62,819 )      (52,326 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      252,594       371,299       225,980       217,690       469,580       455,589  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

40

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Managed Volatility Aggressive Portfolio
Series I		     Managed Volatility Aggressive Portfolio
Series NAV		     Managed Volatility Balanced Portfolio
Series I		  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 285,693     $ 234,648     $ 4,067,119     $ 3,230,767     $ 1,301,223     $ 1,322,163  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      285,693       234,648       4,067,119       3,230,767       1,301,223       1,322,163  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      917,337       —         12,628,541       —         3,838,320       2,191,938  

Net realized gain (loss)

      304,678       794,993       5,125,415       5,730,374       1,363,565       1,573,158  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      1,222,015       794,993       17,753,956       5,730,374       5,201,885       3,765,096  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (2,663,749 )      1,805,170       (37,491,649 )      27,261,620       (9,150,742 )      2,618,880  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (1,156,041 )      2,834,811       (15,670,574 )      36,222,761       (2,647,634 )      7,706,139  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      503,911       553,204       15,559,646       15,779,117       1,286,175       1,246,680  

Transfers between sub-accounts and the company

      43,658       (623,214 )      (3,224,015 )      (8,358,569 )      (1,761,948 )      1,557,384  

Transfers on general account policy loans

      (51,102 )      (183,864 )      (308,397 )      (1,141,622 )      216,637       (16,203 ) 

Withdrawals

      (482,483 )      (1,113,672 )      (5,159,981 )      (4,604,564 )      (4,128,618 )      (1,789,481 ) 

Annual contract fee

      (630,221 )      (621,830 )      (8,597,854 )      (9,009,112 )      (2,560,112 )      (2,578,868 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (616,237 )      (1,989,376 )      (1,730,601 )      (7,334,750 )      (6,947,866 )      (1,580,488 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (1,772,278 )      845,435       (17,401,175 )      28,888,011       (9,595,500 )      6,125,651  

Net assets at beginning of period

      14,338,686       13,493,251       192,188,291       163,300,280       62,006,303       55,880,652  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 12,566,408     $ 14,338,686     $ 174,787,116     $ 192,188,291     $ 52,410,803     $ 62,006,303  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      390,364       451,177       8,724,396       9,108,828       1,500,398       1,543,280  

Units issued

      11,220       9,936       616,403       666,552       43,353       77,545  

Units redeemed

      (27,848 )      (70,749 )      (686,207 )      (1,050,984 )      (210,408 )      (120,427 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      373,736       390,364       8,654,592       8,724,396       1,333,343       1,500,398  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

41

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Managed Volatility Balanced Portfolio
Series NAV		     Managed Volatility Conservative Portfolio
Series I		     Managed Volatility Conservative Portfolio
Series NAV		  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 10,540,644     $ 9,733,277     $ 78,051     $ 82,561     $ 910,869     $ 891,833  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      10,540,644       9,733,277       78,051       82,561       910,869       891,833  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      29,561,169       15,919,263       90,908       61,499       989,471       624,710  

Net realized gain (loss)

      2,994,619       5,560,125       (109,468 )      (73,799 )      (732,545 )      (591,070 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      32,555,788       21,479,388       (18,560 )      (12,300 )      256,926       33,640  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (64,132,662 )      24,944,841       (127,677 )      183,909       (1,949,003 )      1,721,746  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (21,036,230 )      56,157,506       (68,186 )      254,170       (781,208 )      2,647,219  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      34,098,449       37,229,490       76,820       128,970       3,172,963       3,469,967  

Transfers between sub-accounts and the company

      (4,002,540 )      (4,716,893 )      181,517       10,738       (204,176 )      (709,109 ) 

Transfers on general account policy loans

      (1,737,987 )      (1,724,266 )      (12,379 )      51,568       (70,408 )      27,405  

Withdrawals

      (13,716,527 )      (14,583,248 )      (361,274 )      (150,971 )      (2,301,055 )      (1,976,566 ) 

Annual contract fee

      (24,638,308 )      (25,171,283 )      (260,881 )      (272,146 )      (2,079,003 )      (2,133,092 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (9,996,913 )      (8,966,200 )      (376,197 )      (231,841 )      (1,481,679 )      (1,321,395 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (31,033,143 )      47,191,306       (444,383 )      22,329       (2,262,887 )      1,325,824  

Net assets at beginning of period

      447,516,634       400,325,328       3,314,381       3,292,052       35,298,933       33,973,109  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 416,483,491     $ 447,516,634     $ 2,869,998     $ 3,314,381     $ 33,036,046     $ 35,298,933  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      21,747,190       22,207,129       83,757       89,696       1,903,845       1,977,908  

Units issued

      1,054,539       1,216,512       7,572       8,686       175,496       224,952  

Units redeemed

      (1,537,653 )      (1,676,451 )      (17,189 )      (14,625 )      (257,263 )      (299,015 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      21,264,076       21,747,190       74,140       83,757       1,822,078       1,903,845  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

42

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Managed Volatility Growth Portfolio Series I     Managed Volatility Growth Portfolio
Series NAV		     Managed Volatility Moderate Portfolio
Series I		  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 1,528,534     $ 1,399,155     $ 13,971,864     $ 12,484,184     $ 331,022     $ 324,073  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      1,528,534       1,399,155       13,971,864       12,484,184       331,022       324,073  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      5,952,874       2,580,887       53,073,674       22,075,989       835,441       450,098  

Net realized gain (loss)

      2,428,646       3,168,060       13,821,734       11,082,497       (49,844 )      6,379  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      8,381,520       5,748,947       66,895,408       33,158,486       785,597       456,477  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (14,406,965 )      5,012,807       (121,462,659 )      55,470,236       (1,642,378 )      799,138  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (4,496,911 )      12,160,909       (40,595,387 )      101,112,906       (525,759 )      1,579,688  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      2,399,749       2,525,256       55,277,086       60,691,679       225,871       229,812  

Transfers between sub-accounts and the company

      300,384       (3,228,728 )      (6,666,089 )      (8,451,749 )      (227,011 )      (38,042 ) 

Transfers on general account policy loans

      (178,143 )      10,200       (4,961,203 )      (3,472,150 )      (9,700 )      243,208  

Withdrawals

      (2,732,401 )      (4,568,359 )      (27,580,947 )      (21,655,283 )      (514,971 )      (667,228 ) 

Annual contract fee

      (3,542,199 )      (3,450,486 )      (34,161,186 )      (35,198,176 )      (645,705 )      (632,230 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (3,752,610 )      (8,712,117 )      (18,092,339 )      (8,085,679 )      (1,171,516 )      (864,480 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (8,249,521 )      3,448,792       (58,687,726 )      93,027,227       (1,697,275 )      715,208  

Net assets at beginning of period

      73,320,422       69,871,630       640,383,574       547,356,347       14,344,284       13,629,076  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 65,070,901     $ 73,320,422     $ 581,695,848     $ 640,383,574     $ 12,647,009     $ 14,344,284  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      1,865,034       2,107,664       30,337,018       30,780,881       342,224       363,787  

Units issued

      45,903       35,698       1,690,679       2,317,407       3,609       11,544  

Units redeemed

      (139,841 )      (278,328 )      (2,537,958 )      (2,761,270 )      (31,580 )      (33,107 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      1,771,096       1,865,034       29,489,739       30,337,018       314,253       342,224  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

43

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Managed Volatility Moderate Portfolio
Series NAV		     Mid Cap Index Trust Series I     Mid Cap Index Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 2,412,334     $ 2,390,072     $ 313,677     $ 102,459     $ 812,207     $ 305,081  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      2,412,334       2,390,072       313,677       102,459       812,207       305,081  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      5,879,302       2,945,005       1,933,441       878,988       4,724,734       2,994,070  

Net realized gain (loss)

      (389,755 )      105,558       61,387       823,193       1,269,592       695,554  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      5,489,547       3,050,563       1,994,828       1,702,181       5,994,326       3,689,624  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (11,448,455 )      4,861,720       (5,342,568 )      872,941       (14,645,222 )      3,677,511  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (3,546,574 )      10,302,355       (3,034,063 )      2,677,581       (7,838,689 )      7,672,216  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      9,135,530       9,528,097       501,758       362,347       5,427,784       4,135,234  

Transfers between sub-accounts and the company

      (8,386,030 )      7,374,252       (356,383 )      12,221,104       643,396       16,703,704  

Transfers on general account policy loans

      (490,394 )      (1,150,501 )      (321,244 )      (58,359 )      (470,567 )      (691,958 ) 

Withdrawals

      (3,700,276 )      (2,046,629 )      (1,135,077 )      (816,907 )      (2,545,111 )      (1,279,915 ) 

Annual contract fee

      (5,511,746 )      (5,454,112 )      (1,325,560 )      (781,103 )      (2,618,478 )      (1,978,065 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (8,952,916 )      8,251,107       (2,636,506 )      10,927,082       437,024       16,889,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (12,499,490 )      18,553,462       (5,670,569 )      13,604,663       (7,401,665 )      24,561,216  

Net assets at beginning of period

      103,791,971       85,238,509       29,470,072       15,865,409       67,588,547       43,027,331  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 91,292,481     $ 103,791,971     $ 23,799,503     $ 29,470,072     $ 60,186,882     $ 67,588,547  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      5,139,787       4,728,247       516,844       322,241       1,804,976       1,331,350  

Units issued

      384,110       843,118       10,293       277,120       258,627       699,956  

Units redeemed

      (817,946 )      (431,578 )      (55,740 )      (82,517 )      (248,365 )      (226,330 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      4,705,951       5,139,787       471,397       516,844       1,815,238       1,804,976  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

44

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Mid Cap Stock Trust Series I     Mid Cap Stock Trust Series NAV     Mid Value Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ —       $ —       $ —       $ —       $ 100,294     $ 129,769  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      —         —         —         —         100,294       129,769  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      2,470,831       427,136       4,061,342       590,026       1,022,496       1,214,426  

Net realized gain (loss)

      1,504,443       361,347       417,952       (93,262 )      (44,177 )      87,849  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      3,975,274       788,483       4,479,294       496,764       978,319       1,302,275  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (4,130,063 )      4,211,385       (5,320,569 )      6,281,003       (2,394,176 )      16,891  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (154,789 )      4,999,868       (841,275 )      6,777,767       (1,315,563 )      1,448,935  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      490,742       495,204       2,563,157       2,459,508       270,249       264,773  

Transfers between sub-accounts and the company

      358,108       (563,986 )      4,910,422       821,380       (375,293 )      (1,253,566 ) 

Transfers on general account policy loans

      (84,834 )      159,239       (378,225 )      (200,884 )      (52,228 )      (40,608 ) 

Withdrawals

      (1,417,573 )      (908,473 )      (1,249,200 )      (2,335,327 )      (577,223 )      (463,647 ) 

Annual contract fee

      (1,078,420 )      (1,034,931 )      (1,454,307 )      (1,121,898 )      (523,890 )      (543,135 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (1,731,977 )      (1,852,947 )      4,391,847       (377,221 )      (1,258,385 )      (2,036,183 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (1,886,766 )      3,146,921       3,550,572       6,400,546       (2,573,948 )      (587,248 ) 

Net assets at beginning of period

      21,463,917       18,316,996       30,902,772       24,502,226       13,494,713       14,081,961  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 19,577,151     $ 21,463,917     $ 34,453,344     $ 30,902,772     $ 10,920,765     $ 13,494,713  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      475,931       522,065       314,358       320,684       389,154       452,518  

Units issued

      33,715       25,240       88,393       67,984       8,970       10,274  

Units redeemed

      (68,681 )      (71,374 )      (46,780 )      (74,310 )      (44,904 )      (73,638 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      440,965       475,931       355,971       314,358       353,220       389,154  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

45

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Mid Value Trust Series NAV     Money Market Trust Series I     Money-Market Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 253,400     $ 294,150     $ 391,743     $ 164,000     $ 1,300,319     $ 593,723  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      253,400       294,150       391,743       164,000       1,300,319       593,723  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      2,408,060       2,549,544       —         317       7       995  

Net realized gain (loss)

      (180,264 )      100,322       —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      2,227,796       2,649,866       —         317       7       995  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (5,701,023 )      134,834       —         4       —         (1 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (3,219,827 )      3,078,850       391,743       164,321       1,300,326       594,717  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      2,326,258       2,180,222       1,898,273       2,535,316       111,789,766       112,105,444  

Transfers between sub-accounts and the company

      1,691,514       (1,073,093 )      8,659,483       1,860,878       (100,274,112 )      (122,509,868 ) 

Transfers on general account policy loans

      (217,597 )      (210,066 )      819,297       (1,608,540 )      (827,156 )      (1,491,163 ) 

Withdrawals

      (1,326,015 )      (680,271 )      (5,146,454 )      (9,195,473 )      4,825,586       (144,974 ) 

Annual contract fee

      (1,176,241 )      (1,201,915 )      (2,731,882 )      (2,854,152 )      (6,167,116 )      (7,008,288 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      1,297,919       (985,123 )      3,498,717       (9,261,971 )      9,346,968       (19,048,849 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (1,921,908 )      2,093,727       3,890,460       (9,097,650 )      10,647,294       (18,454,132 ) 

Net assets at beginning of period

      28,888,722       26,794,995       25,942,096       35,039,746       91,727,404       110,181,536  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 26,966,814     $ 28,888,722     $ 29,832,556     $ 25,942,096     $ 102,374,698     $ 91,727,404  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      541,810       560,117       1,045,888       1,420,598       9,104,460       11,007,435  

Units issued

      111,560       111,085       544,816       299,637       11,380,820       11,836,694  

Units redeemed

      (87,106 )      (129,392 )      (406,404 )      (674,347 )      (10,482,772 )      (13,739,669 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      566,264       541,810       1,184,300       1,045,888       10,002,508       9,104,460  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

46

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     PIMCO All Asset     Real Estate Securities Trust Series I     Real Estate Securities Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 953,792     $ 1,210,118     $ 400,433     $ 139,509     $ 787,695     $ 296,050  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      953,792       1,210,118       400,433       139,509       787,695       296,050  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      —         —         —         —         —         —    

Net realized gain (loss)

      (103,093 )      (136,636 )      2,102,196       1,088,593       1,637,554       2,187,723  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      (103,093 )      (136,636 )      2,102,196       1,088,593       1,637,554       2,187,723  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (2,757,744 )      2,205,012       (3,330,105 )      389,056       (4,297,112 )      702,524  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (1,907,045 )      3,278,494       (827,476 )      1,617,158       (1,871,863 )      3,186,297  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      2,305,484       1,390,123       478,893       504,936       4,182,685       4,630,665  

Transfers between sub-accounts and the company

      4,750,265       4,492,748       (1,017,457 )      (818,110 )      (7,128,901 )      (3,650,452 ) 

Transfers on general account policy loans

      29,266       42,712       (191,594 )      (131,274 )      (436,941 )      (873,948 ) 

Withdrawals

      (1,650,541 )      (985,939 )      (1,834,858 )      (1,060,844 )      (1,694,279 )      (1,177,105 ) 

Annual contract fee

      (1,100,922 )      (964,472 )      (1,102,665 )      (1,208,989 )      (1,927,448 )      (2,154,332 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      4,333,552       3,975,172       (3,667,681 )      (2,714,281 )      (7,004,884 )      (3,225,172 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      2,426,507       7,253,666       (4,495,157 )      (1,097,123 )      (8,876,747 )      (38,875 ) 

Net assets at beginning of period

      30,167,421       22,913,755       26,663,685       27,760,808       53,030,200       53,069,075  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 32,593,928     $ 30,167,421     $ 22,168,528     $ 26,663,685     $ 44,153,453     $ 53,030,200  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      1,613,893       1,369,696       137,652       152,252       326,744       347,455  

Units issued

      409,869       404,328       1,495       2,111       40,786       42,882  

Units redeemed

      (172,294 )      (160,131 )      (20,594 )      (16,711 )      (85,830 )      (63,593 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      1,851,468       1,613,893       118,553       137,652       281,700       326,744  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

47

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Science & Technology Trust Series I     Science & Technology Trust Series NAV     Select Bond Trust Series I  
     2018     2017     2018     2017     2018 (a)     2017  

Income:

             

Dividend distributions received

    $ —       $ 12,062     $ —       $ 21,551     $ 87,797     $ 101,624  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      —         12,062       —         21,551       87,797       101,624  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      3,845,254       1,290,300       4,742,616       1,367,164       —         —    

Net realized gain (loss)

      814,185       620,579       761,746       330,787       (30,254 )      (14,386 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      4,659,439       1,910,879       5,504,362       1,697,951       (30,254 )      (14,386 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (4,461,297 )      5,456,073       (5,931,820 )      6,368,551       (79,024 )      41,551  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      198,142       7,379,014       (427,458 )      8,088,053       (21,481 )      128,789  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      454,926       496,022       2,253,766       1,893,093       93,036       89,415  

Transfers between sub-accounts and the company

      (1,978,300 )      2,687,800       4,524,350       1,702,606       (157,980 )      (5,598 ) 

Transfers on general account policy loans

      (282,963 )      47,491       143,823       (140,119 )      33,869       (136,424 ) 

Withdrawals

      (1,706,573 )      (442,380 )      (1,779,926 )      (1,745,839 )      (277,782 )      (102,761 ) 

Annual contract fee

      (1,212,926 )      (1,103,311 )      (1,296,622 )      (1,049,169 )      (192,955 )      (196,710 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (4,725,836 )      1,685,622       3,845,391       660,572       (501,812 )      (352,078 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (4,527,694 )      9,064,636       3,417,933       8,748,625       (523,293 )      (223,289 ) 

Net assets at beginning of period

      25,956,864       16,892,228       28,379,763       19,631,138       3,592,149       3,815,438  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 21,429,170     $ 25,956,864     $ 31,797,696     $ 28,379,763     $ 3,068,856     $ 3,592,149  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      469,232       430,963       646,311       631,328       300,657       331,065  

Units issued

      13,598       96,022       195,767       156,640       13,283       31,697  

Units redeemed

      (93,074 )      (57,753 )      (113,793 )      (141,657 )      (55,972 )      (62,105 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      389,756       469,232       728,285       646,311       257,968       300,657  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(a)

Renamed on April 30, 2018. Previously known as Bond Trust Series I.

 

See accompanying notes.

 

48

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Select Bond Trust Series NAV     Short Term Government Income Trust
Series I		     Short Term Government Income Trust
Series NAV		  
     2018 (b)     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 694,654     $ 667,692     $ 113,376     $ 87,888     $ 460,925     $ 263,149  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      694,654       667,692       113,376       87,888       460,925       263,149  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      —         —         —         —         —         —    

Net realized gain (loss)

      (146,679 )      (42,738 )      (145,026 )      (49,727 )      (188,622 )      (139,399 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      (146,679 )      (42,738 )      (145,026 )      (49,727 )      (188,622 )      (139,399 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (625,959 )      202,776       71,887       (5,007 )      (68,410 )      (21,081 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (77,984 )      827,730       40,237       33,154       203,893       102,669  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      2,667,000       2,783,925       678,529       520,317       2,216,389       2,211,772  

Transfers between sub-accounts and the company

      231,294       1,558,917       (532,768 )      785,544       1,153,260       1,431,600  

Transfers on general account policy loans

      (200,209 )      (152,866 )      41,871       20,782       (210,895 )      742,328  

Withdrawals

      (796,251 )      (644,326 )      (361,953 )      (162,583 )      (385,090 )      (931,441 ) 

Annual contract fee

      (1,053,386 )      (1,050,458 )      (793,236 )      (769,075 )      (725,891 )      (683,217 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      848,448       2,495,192       (967,557 )      394,985       2,047,773       2,771,042  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      770,464       3,322,922       (927,320 )      428,139       2,251,666       2,873,711  

Net assets at beginning of period

      23,318,542       19,995,620       6,242,260       5,814,121       19,499,311       16,625,600  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 24,089,006     $ 23,318,542     $ 5,314,940     $ 6,242,260     $ 21,750,977     $ 19,499,311  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      1,946,376       1,729,855       577,254       540,725       1,795,919       1,540,743  

Units issued

      347,420       869,989       75,586       106,879       460,575       480,308  

Units redeemed

      (275,383 )      (653,468 )      (165,412 )      (70,350 )      (270,837 )      (225,132 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      2,018,413       1,946,376       487,428       577,254       1,985,657       1,795,919  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(b)

Renamed on April 30, 2018. Previously known as Bond Trust Series NAV.

 

See accompanying notes.

 

49

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Small Cap Index Trust Series I     Small Cap Index Trust Series NAV     Small Cap Opportunities Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 108,533     $ 47,444     $ 390,291     $ 162,527     $ 134,652     $ 133,563  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      108,533       47,444       390,291       162,527       134,652       133,563  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      697,416       430,257       2,290,478       1,285,761       6,363,188       2,085,818  

Net realized gain (loss)

      595,555       328,835       361,646       387,517       54,066       208,683  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      1,292,971       759,092       2,652,124       1,673,278       6,417,254       2,294,501  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (2,619,553 )      634,257       (7,677,539 )      2,548,501       (10,564,221 )      1,040,266  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (1,218,049 )      1,440,793       (4,635,124 )      4,384,306       (4,012,315 )      3,468,330  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      177,426       212,875       3,132,346       2,565,370       831,079       888,208  

Transfers between sub-accounts and the company

      358,979       487,890       1,219,618       1,772,417       (1,272,729 )      (1,463,893 ) 

Transfers on general account policy loans

      (77,895 )      (39,654 )      (162,658 )      (267,888 )      15,295       (75,999 ) 

Withdrawals

      (750,380 )      (318,847 )      (441,623 )      (495,069 )      (1,933,630 )      (1,592,760 ) 

Annual contract fee

      (376,742 )      (362,450 )      (1,305,245 )      (1,160,432 )      (1,601,535 )      (1,655,066 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (668,612 )      (20,186 )      2,442,438       2,414,398       (3,961,520 )      (3,899,510 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (1,886,661 )      1,420,607       (2,192,686 )      6,798,704       (7,973,835 )      (431,180 ) 

Net assets at beginning of period

      11,035,041       9,614,434       35,451,777       28,653,073       33,642,716       34,073,896  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 9,148,380     $ 11,035,041     $ 33,259,091     $ 35,451,777     $ 25,668,881     $ 33,642,716  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      256,946       256,073       1,033,625       955,927       677,464       762,127  

Units issued

      42,686       51,645       217,206       195,297       7,688       6,388  

Units redeemed

      (59,142 )      (50,772 )      (157,545 )      (117,599 )      (85,198 )      (91,051 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      240,490       256,946       1,093,286       1,033,625       599,954       677,464  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

50

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Small Cap Opportunities Trust Series NAV     Small Cap Stock Trust Series I     Small Cap Stock Trust Series NAV  
     2018     2017     2018 (c)     2017     2018 (d)     2017  

Income:

             

Dividend distributions received

    $ 86,549     $ 83,777     $ —       $ —       $ —       $ —    

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      86,549       83,777       —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      3,676,110       1,181,403       259,278       —         1,545,541       —    

Net realized gain (loss)

      516,567       239,891       40,570       (153,619 )      (137,431 )      (400,173 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      4,192,677       1,421,294       299,848       (153,619 )      1,408,110       (400,173 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (6,729,205 )      459,172       (567,365 )      679,524       (2,847,174 )      5,035,326  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (2,449,979 )      1,964,243       (267,517 )      525,905       (1,439,064 )      4,635,153  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      1,156,735       1,368,507       67,584       67,047       1,709,188       1,956,069  

Transfers between sub-accounts and the company

      891,959       421,479       140,767       (217,570 )      (548,070 )      1,297,485  

Transfers on general account policy loans

      (288,509 )      (250,954 )      (41,704 )      13,563       (244,979 )      (147,555 ) 

Withdrawals

      (2,673,748 )      (729,603 )      (217,466 )      (64,896 )      (1,028,615 )      (968,412 ) 

Annual contract fee

      (588,659 )      (607,824 )      (117,855 )      (93,668 )      (952,937 )      (794,589 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (1,502,222 )      201,605       (168,674 )      (295,524 )      (1,065,413 )      1,342,998  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (3,952,201 )      2,165,848       (436,191 )      230,381       (2,504,477 )      5,978,151  

Net assets at beginning of period

      19,736,292       17,570,444       2,426,006       2,195,625       23,253,736       17,275,585  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 15,784,091     $ 19,736,292     $ 1,989,815     $ 2,426,006     $ 20,749,259     $ 23,253,736  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      805,619       797,432       74,446       85,208       600,234       564,985  

Units issued

      182,399       129,096       61,327       7,605       112,554       127,148  

Units redeemed

      (240,527 )      (120,909 )      (71,369 )      (18,367 )      (147,676 )      (91,899 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      747,491       805,619       64,404       74,446       565,112       600,234  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(c)

Renamed on April 30, 2018. Previously known as Small Cap Growth Trust Series I.

(d)

Renamed on April 30, 2018. Previously known as Small Cap Growth Trust Series NAV.

 

See accompanying notes.

 

51

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Small Cap Value Trust Series I     Small Cap Value Trust Series NAV     Small Company Value Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 23,053     $ 36,572     $ 265,642     $ 349,428     $ 51,777     $ 32,520  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      23,053       36,572       265,642       349,428       51,777       32,520  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      417,886       286,645       4,411,430       2,663,046       1,220,849       1,981,287  

Net realized gain (loss)

      (54,034 )      (183,665 )      (1,132,245 )      (356,060 )      390,535       1,977,208  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      363,852       102,980       3,279,185       2,306,986       1,611,384       3,958,495  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (795,790 )      (36,368 )      (7,935,002 )      (1,312,732 )      (3,330,345 )      (2,503,640 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (408,885 )      103,184       (4,390,175 )      1,343,682       (1,667,184 )      1,487,375  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      94,711       85,807       2,984,241       2,821,232       305,623       320,180  

Transfers between sub-accounts and the company

      (434,661 )      (1,171,057 )      (668,410 )      513,400       (386,649 )      (2,461,864 ) 

Transfers on general account policy loans

      (6,303 )      (25,668 )      150,691       (75,403 )      (24,309 )      (16,068 ) 

Withdrawals

      (88,972 )      (339,799 )      (2,005,771 )      (1,124,072 )      (538,506 )      (590,203 ) 

Annual contract fee

      (125,060 )      (135,218 )      (1,489,106 )      (1,459,767 )      (620,827 )      (638,845 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (560,285 )      (1,585,935 )      (1,028,355 )      675,390       (1,264,668 )      (3,386,800 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (969,170 )      (1,482,751 )      (5,418,530 )      2,019,072       (2,931,852 )      (1,899,425 ) 

Net assets at beginning of period

      3,783,091       5,265,842       36,028,993       34,009,921       14,425,426       16,324,851  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 2,813,921     $ 3,783,091     $ 30,610,463     $ 36,028,993     $ 11,493,574     $ 14,425,426  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      122,561       176,951       414,415       406,007       302,283       381,367  

Units issued

      7,395       66,599       52,335       71,606       4,548       18,374  

Units redeemed

      (25,768 )      (120,989 )      (64,603 )      (63,198 )      (30,172 )      (97,458 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      104,188       122,561       402,147       414,415       276,659       302,283  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

52

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Small Company Value Trust Series NAV     Strategic Income Opportunities Trust Series I     Strategic Income Opportunities Trust
Series NAV		  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 116,157     $ 61,917     $ 307,618     $ 288,139     $ 1,348,809     $ 996,231  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      116,157       61,917       307,618       288,139       1,348,809       996,231  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      2,414,128       3,659,071       —         —         —         —    

Net realized gain (loss)

      39,705       594,046       47,963       22,271       (89,927 )      64,095  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      2,453,833       4,253,117       47,963       22,271       (89,927 )      64,095  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (6,466,772 )      (1,481,944 )      (774,523 )      172,536       (2,978,005 )      552,617  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (3,896,782 )      2,833,090       (418,942 )      482,946       (1,719,123 )      1,612,943  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      2,213,351       2,082,883       446,544       345,275       3,414,477       2,295,984  

Transfers between sub-accounts and the company

      2,195,675       (46,569 )      (283,529 )      903,451       2,129,660       3,715,983  

Transfers on general account policy loans

      (368,976 )      (236,393 )      (48,383 )      (1,739 )      (427,945 )      (188,301 ) 

Withdrawals

      (1,216,101 )      (556,773 )      (469,745 )      (285,220 )      (1,177,393 )      (1,028,137 ) 

Annual contract fee

      (876,970 )      (855,071 )      (710,235 )      (736,128 )      (1,297,204 )      (1,232,163 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      1,946,979       388,077       (1,065,348 )      225,639       2,641,595       3,563,366  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (1,949,803 )      3,221,167       (1,484,290 )      708,585       922,472       5,176,309  

Net assets at beginning of period

      27,310,702       24,089,535       9,153,904       8,445,319       32,034,980       26,858,671  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 25,360,899     $ 27,310,702     $ 7,669,614     $ 9,153,904     $ 32,957,452     $ 32,034,980  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      858,040       844,484       315,509       307,359       1,486,353       1,316,714  

Units issued

      160,057       114,297       19,779       41,600       356,155       333,559  

Units redeemed

      (102,957 )      (100,741 )      (56,926 )      (33,450 )      (232,896 )      (163,920 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      915,140       858,040       278,362       315,509       1,609,612       1,486,353  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

53

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Total Bond Market Series Trust NAV     Total Stock Market Index Trust Series I     Total Stock Market Index Trust Series NAV  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 717,234     $ 672,614     $ 185,301     $ 205,150     $ 787,969     $ 779,504  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      717,234       672,614       185,301       205,150       787,969       779,504  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      —         —         507,428       311,243       2,023,647       1,129,078  

Net realized gain (loss)

      (133,816 )      (38,163 )      645,258       905,343       2,330,574       1,911,433  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      (133,816 )      (38,163 )      1,152,686       1,216,586       4,354,221       3,040,511  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (610,533 )      76,041       (2,137,201 )      953,700       (8,673,284 )      5,897,313  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      (27,115 )      710,492       (799,214 )      2,375,436       (3,531,094 )      9,717,328  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      2,303,755       2,366,759       379,688       356,183       4,740,183       3,579,295  

Transfers between sub-accounts and the company

      1,712,679       4,005,701       92,921       8,514,391       (1,469,417 )      11,508,825  

Transfers on general account policy loans

      (39,027 )      (151,252 )      78,020       163,918       (173,362 )      (248,474 ) 

Withdrawals

      (518,147 )      (1,107,093 )      (1,003,793 )      (1,026,249 )      (978,010 )      (453,757 ) 

Annual contract fee

      (998,167 )      (944,488 )      (964,549 )      (845,721 )      (1,993,155 )      (1,700,975 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      2,461,093       4,169,627       (1,417,713 )      7,162,522       126,239       12,684,914  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      2,433,978       4,880,119       (2,216,927 )      9,537,958       (3,404,855 )      22,402,242  

Net assets at beginning of period

      24,385,229       19,505,110       16,220,870       6,682,912       61,254,316       38,852,074  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 26,819,207     $ 24,385,229     $ 14,003,943     $ 16,220,870     $ 57,849,461     $ 61,254,316  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      972,096       803,505       503,102       249,913       569,712       435,985  

Units issued

      190,244       262,486       14,880       324,072       72,798       201,435  

Units redeemed

      (90,588 )      (93,895 )      (57,379 )      (70,883 )      (72,201 )      (67,708 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      1,071,752       972,096       460,603       503,102       570,309       569,712  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Ultra Short Term Bond Trust Series I     Ultra Short Term Bond Trust Series NAV     Utilities Trust Series I  
     2018     2017     2018     2017     2018     2017  

Income:

             

Dividend distributions received

    $ 24,988     $ 19,598     $ 104,775     $ 84,272     $ 124,044     $ 95,083  

Expenses:

             

Mortality and expense risk and administrative charges

      —         —         —         —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income (loss)

      24,988       19,598       104,775       84,272       124,044       95,083  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses) on investments:

             

Capital gain distributions received

      (1 )      —         —         —         —         —    

Net realized gain (loss)

      (24,373 )      (4,231 )      (25,629 )      (27,845 )      19,461       (17,028 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Realized gains (losses)

      (24,374 )      (4,231 )      (25,629 )      (27,845 )      19,461       (17,028 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      21,619       (7,512 )      4,813       (26,939 )      (112,875 )      464,540  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      22,233       7,855       83,959       29,488       30,630       542,595  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Changes from principal transactions:

             

Purchase payments

      67,223       100,127       443,786       660,667       101,899       74,720  

Transfers between sub-accounts and the company

      211,782       556,989       2,065,233       2,080,254       (189,726 )      131,918  

Transfers on general account policy loans

      (352,695 )      —         (30,579 )      (1,129,162 )      (53,153 )      2,417  

Withdrawals

      (310,775 )      355       (772,078 )      (105,448 )      (44,587 )      (108,908 ) 

Annual contract fee

      (122,970 )      (84,782 )      (263,032 )      (253,396 )      (166,822 )      (166,757 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (507,435 )      572,689       1,443,330       1,252,915       (352,389 )      (66,610 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total increase (decrease) in net assets

      (485,202 )      580,544       1,527,289       1,282,403       (321,759 )      475,985  

Net assets at beginning of period

      1,797,598       1,217,054       5,199,385       3,916,982       3,968,145       3,492,160  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets at end of period

    $ 1,312,396     $ 1,797,598     $ 6,726,674     $ 5,199,385     $ 3,646,386     $ 3,968,145  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2018     2017     2018     2017     2018     2017  

Units, beginning of period

      176,845       120,520       509,691       386,353       97,621       98,578  

Units issued

      67,011       70,607       272,374       366,374       2,325       51,667  

Units redeemed

      (116,525 )      (14,282 )      (132,606 )      (243,036 )      (11,026 )      (52,624 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Units, end of period

      127,331       176,845       649,459       509,691       88,920       97,621  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See accompanying notes.

 

55

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS’ EQUITY

For the years ended December 31,

 

     Utilities Trust Series NAV  
     2018     2017  

Income:

     

Dividend distributions received

    $ 551,880     $ 414,420  

Expenses:

     

Mortality and expense risk and administrative charges

      —         —    
  

 

 

    

 

 

  

Net investment income (loss)

      551,880       414,420  
  

 

 

    

 

 

  

Realized gains (losses) on investments:

     

Capital gain distributions received

      —         —    

Net realized gain (loss)

      (66,927 )      (282,723 ) 
  

 

 

    

 

 

  

Realized gains (losses)

      (66,927 )      (282,723 ) 
  

 

 

    

 

 

  

Unrealized appreciation (depreciation) during the period

      (351,342 )      2,148,448  
  

 

 

    

 

 

  

Net increase (decrease) in net assets from operations

      133,611       2,280,145  
  

 

 

    

 

 

  

Changes from principal transactions:

     

Purchase payments

      1,383,871       1,569,008  

Transfers between sub-accounts and the company

      (560,521 )      (614,520 ) 

Transfers on general account policy loans

      (231,033 )      (261,400 ) 

Withdrawals

      (1,175,099 )      (493,272 ) 

Annual contract fee

      (716,030 )      (748,379 ) 
  

 

 

    

 

 

  

Net increase (decrease) in net assets from principal transactions

      (1,298,812 )      (548,563 ) 
  

 

 

    

 

 

  

Total increase (decrease) in net assets

      (1,165,201 )      1,731,582  

Net assets at beginning of period

      17,121,845       15,390,263  
  

 

 

    

 

 

  

Net assets at end of period

    $ 15,956,644     $ 17,121,845  
  

 

 

    

 

 

  
     2018     2017  

Units, beginning of period

      525,609       542,473  

Units issued

      84,656       90,009  

Units redeemed

      (124,964 )      (106,873 ) 
  

 

 

    

 

 

  

Units, end of period

      485,301       525,609  
  

 

 

    

 

 

  

 

See accompanying notes.

 

56

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS

December 31, 2018

 

1.

Organization

John Hancock Life Insurance Company (U.S.A.) Separate Account A (the “Account”) is a separate account established by John Hancock Life Insurance Company (U.S.A.) (the “Company”). The Account operates as a Unit Investment Trust under the Investment Company Act of 1940, as amended (the “Act”) and is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 Financial Services — Investment Companies. The Account consists of 95 active sub-accounts which are exclusively invested in a corresponding portfolio of the John Hancock Variable Insurance Trust (the “Trust”), and 5 active sub-accounts that are invested in portfolios of other Non-affiliated Trusts (the “Non-affiliated Trusts”). The Trust and Non-affiliated Trusts are registered under the Act as an open-ended management investment company, commonly known as a mutual fund, which does not transact with the general public. The Account is a funding vehicle for the allocation of net premiums under single premium variable life and variable universal life insurance contracts (the “Contracts”) issued by the Company.

The Company is a stock life insurance company organized originally under the laws of the State of Maine in 1955 and later in 1992, the Company changed its state of domicile to the State of Michigan. The Company is an indirect, wholly owned subsidiary of Manulife Financial Corporation (“MFC”), a Canadian based publicly traded life insurance company. MFC and its subsidiaries are known collectively as Manulife Financial.

The Company is required to maintain assets in the Account with a total fair value of at least equal to the reserves and other liabilities relating to the variable benefits under all Contracts participating in the Account. These assets may not be charged with liabilities which arise from any other business the Company conducts. However, all obligations under the Contracts are general corporate obligations of the Company.

In addition to the Account, certain contract owners may also allocate funds to the fixed account, which is part of the Company’s general account. Because of exemptive and exclusionary provisions, interests in the fixed account have not been registered under the Securities Act of 1933, and the Company’s general account has not been registered as an investment company under the Investment Company Act of 1940. Net interfund transfers include transfers between separate and general accounts.

Each sub-account holds shares of a particular series (“Portfolio”) of a registered investment company. Sub-accounts that invest in Portfolios of the Trust may offer 2 classes of units to fund Contracts issued by the Company. These classes, Series I and Series NAV, represent an interest in the same Trust Portfolio, but in different classes of that Portfolio. Series I and Series NAV shares of the Trust Portfolio differ in the level of 12b-1 fees and other expenses assessed against the Portfolio’s assets.

As a result of a portfolio change, the following sub-accounts of the Account were renamed as follows:

 

Previous Name

   

New Name

   

Effective

Date          

Bond Trust Series I

    Select Bond Trust Series I    04/30/2018

Bond Trust Series NAV

    Select Bond Trust Series NAV    04/30/2018

Small Cap Growth Trust Series I

    Small Cap Stock Trust Series I    04/30/2018

Small Cap Growth Trust Series NAV

    Small Cap Stock Trust Series NAV    04/30/2018

Funds transferred in 2018 are as follows:

 

Transferred from

   

Transferred to

   

Effective

Date          

Alpha Opportunities Trust Series I

    Mid Cap Stock Trust Series I    04/27/2018

Alpha Opportunities Trust Series NAV

    Mid Cap Stock Trust Series NAV    04/27/2018

 

57

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

2.

Significant Accounting Policies

Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from reported results using those estimates.

Valuation of Investments

Investments made in the Portfolios of the Trust, and of the Non-affiliated Trusts, are valued at fair value based on the reported net asset values of such Portfolios. Investment transactions are recorded on the trade date. Income from dividends, and gains from realized gain distributions are recorded on the ex-dividend date. Realized gains and losses on the sales of investments are computed on a first-in, first-out basis.

Net Assets in Payout (Annuitization) Period

A portion of net assets is allocated to annuity policies in the payout period. The liability for these policies is calculated using statutory accounting using mortality assumptions and an assumed interest rate. Mortality assumptions are based on the Individual Annuity Mortality Table in effect at the time of annuitization. The assumed interest rate is 3% to 4%, as regulated by the laws of the respective states. The mortality risk is borne entirely by the Company and may result in additional amounts being transferred into the variable annuity account by the Company to cover greater longevity of annuitants than expected. Conversely, if amounts allocated exceed amounts required, transfers may be made to the Company.

Amounts Receivable/Payable

Receivables/Payables from/to Portfolios/the Company are due to unsettled contract transactions (net of asset-based charges) and/or subsequent/preceding purchases/sales of the respective Portfolios’ shares. The amounts are due from/to either the respective Portfolio and/or the Company for the benefit of contract owners. There are no unsettled policy transactions at December 31, 2018.

 

58

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

3.

Federal Income Taxes

The Account does not file separate tax returns. The taxable income of the Account is consolidated with that of the Company within the consolidated federal tax return. Any tax contingencies arising from the taxable income generated by the Account is the responsibility of the Company and the Company holds any and all tax contingencies on its financial statements. The Company’s consolidated federal tax return for the years 2014 and 2015 are currently under examination by the Internal Revenue Service. The years from 2015 are also open for examination by the internal revenue service. The Account is not a party to the consolidated tax sharing agreement thus no amount of income taxes or tax contingencies are passed through to the Account. The legal form of the Account is not taxable in any state or foreign jurisdictions.

The income taxes topic of the FASB ASC establishes a minimum threshold for financial statement recognition of the benefit of positions taken, or expected to be taken, in filing tax returns (including whether the Account is taxable in certain jurisdictions). The topic requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet the more-likely-than-not threshold would be recorded as tax expense or benefit.

The Account complies with the provisions of FASB ASC Topic 740, Income Taxes. As of December 31, 2018, the Account did not have a liability for any uncertain tax positions. The Account recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statements of Operations and Changes in Contract Owners’ Equity.

 

4.

Transactions with Affiliates

The Company has an administrative services agreement with Manulife Financial, whereby Manulife Financial or its designee, with the consent of the Company, performs certain services on behalf of the Company necessary for the operation of the Account. John Hancock Investment Management Services, LLC (“JHIMS”), a Delaware limited liability company controlled by MFC, serves as investment adviser for the Trust.

John Hancock Distributors, LLC, a registered broker-dealer and wholly owned subsidiary of JHUSA, acts as the principle underwriter of the Contracts pursuant to a distribution agreement with the Company. Contracts are sold by registered representatives of either John Hancock Distributors, LLC or other broker-dealers having distribution agreements with John Hancock Distributors, LLC.

Certain officers of the Account are officers and directors of JHUSA or the Trust.

Contract charges, as described in Note 9, are paid to the Company.

 

59

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

5.

Fair Value Measurements

ASC 820 “Fair Value Measurements and Disclosures” provides a single definition of fair value for accounting purposes, establishes a consistent framework for measuring fair value, and expands disclosure requirements about fair value measurements. ASC 820 defines fair value as the value that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit value. An exit value is not a forced liquidation or distressed sale.

Following ASC 820 guidance, the Account has categorized its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Account’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

 

•  

Level 1 – Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Account has the ability to access at the measurement date.

 

•  

Level 2 – Fair value measurements using inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

 

•  

Level 3 – Fair value measurements using significant non market observable inputs.

All of the Account’s sub-accounts’ investments in a Portfolio of the Trust were valued at the reported net asset value of the Portfolio and categorized as Level 1 as of December 31, 2018. The following table presents the Account’s assets that are measured at fair value on a recurring basis by fair value hierarchy level under ASC 820, as of December 31, 2018:

 

         Level 1              Level 2              Level 3              Total      

Mutual Funds

            

Affiliated

    $ 4,421,146,641        —          —          4,421,146,641  

NonAffiliated

    $ 81,935,416        —          —          81,935,416  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 4,503,082,057        —          —          4,503,082,057  
  

 

 

     

 

 

     

 

 

     

 

 

  

Assets owned by the Account are primarily open-ended mutual fund investments issued by the Trust. These are classified within Level 1, as fair values of the underlying funds are based upon reported net asset values (“NAV”), which represent the values at which each sub-account can redeem its investments.

Changes in valuation techniques may result in transfer in or out of an assigned level within the disclosure hierarchy. Transfers between investment levels may occur as the availability of a price source or data used in an investment’s valuation changes. Transfers between investment levels are recognized at the beginning of the reporting period. There have been no transfers between any level of fair value measurements during the period ended December 31, 2018.

 

60

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

6.

Purchases and Sales of Investments

The cost of purchases including reinvestment of dividend distributions and proceeds from the sales of investments in the Portfolios of the Trust and Non-affiliated Trusts during 2018 were as follows:

 

     Purchases      Sales  

Sub-Account

      

500 Index Fund Series NAV

    $ 51,922,912      $ 40,564,700  

Active Bond Trust Series I

      1,797,291        969,089  

Active Bond Trust Series NAV

      9,641,600        9,555,239  

Alpha Opportunities Trust Series I (a)

      52,923        464,750  

Alpha Opportunities Trust Series NAV (b)

      597,871        3,739,254  

American Asset Allocation Trust Series I

      35,750,994        11,254,855  

American Global Growth Trust Series I

      4,844,133        4,381,857  

American Growth Trust Series I

      25,857,379        15,355,537  

American Growth-Income Trust Series I

      28,432,979        24,964,580  

American International Trust Series I

      18,291,211        10,091,038  

Blue Chip Growth Trust Series I

      8,117,550        7,988,389  

Blue Chip Growth Trust Series NAV

      29,094,548        12,974,204  

Capital Appreciation Trust Series I

      8,777,449        6,070,436  

Capital Appreciation Trust Series NAV

      14,157,877        6,556,885  

Capital Appreciation Value Trust Series I

      523,448        667,370  

Capital Appreciation Value Trust Series NAV

      17,135,145        11,109,197  

Core Bond Trust Series I

      862,891        2,279,751  

Core Bond Trust Series NAV

      13,506,195        17,552,188  

Emerging Markets Value Trust Series I

      1,466,358        1,684,838  

Emerging Markets Value Trust Series NAV

      15,491,765        7,896,113  

Equity Income Trust Series I

      6,214,270        6,891,346  

Equity Income Trust Series NAV

      19,419,662        9,415,766  

Financial Industries Trust Series I

      358,651        804,392  

Financial Industries Trust Series NAV

      3,152,085        3,166,538  

Fundamental All Cap Core Trust Series I

      284,939        338,770  

Fundamental All Cap Core Trust Series NAV

      8,484,861        3,347,333  

Fundamental Large Cap Value Trust Series I

      1,086,513        4,304,209  

Fundamental Large Cap Value Trust Series NAV

      11,897,627        6,919,237  

Global Bond Trust Series I

      513,069        577,992  

Global Bond Trust Series NAV

      13,776,342        4,634,779  

Global Trust Series I

      530,020        1,488,423  

Global Trust Series NAV

      4,225,170        4,465,145  

Health Sciences Trust Series I

      3,865,644        4,918,703  

Health Sciences Trust Series NAV

      13,047,427        6,185,419  

High Yield Trust Series I

      1,822,345        2,975,352  

High Yield Trust Series NAV

      10,611,042        8,819,654  

International Equity Index Series I

      2,744,487        4,072,606  

International Equity Index Series NAV

      22,888,575        8,179,964  

International Growth Stock Trust Series I

      778,397        828,502  

International Growth Stock Trust Series NAV

      4,889,412        4,446,063  

International Small Company Trust Series I

      451,311        2,964,674  

International Small Company Trust Series NAV

      6,937,088        3,933,333  

International Value Trust Series I

      1,651,234        3,297,018  

International Value Trust Series NAV

      7,494,408        5,099,338  

Investment Quality Bond Trust Series I

      876,757        1,341,953  

Investment Quality Bond Trust Series NAV

      4,719,047        2,975,249  

Lifestyle Aggressive Portfolio Series NAV

      8,010,755        2,387,819  

Lifestyle Balanced Portfolio Series NAV

      17,340,439        3,926,173  

Lifestyle Conservative Portfolio Series NAV

      1,089,478        237,847  

 

61

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

6.

Purchases and Sales of Investments — (continued)

 

     Purchases      Sales  

Sub-Account

      

Lifestyle Growth Portfolio Series I

    $ 58,907      $ 423,591  

Lifestyle Growth Portfolio Series NAV

      44,007,255        18,570,419  

Lifestyle Moderate Portfolio Series NAV

      5,703,743        1,497,315  

M Capital Appreciation

      5,112,486        2,710,112  

M International Equity

      1,596,721        5,983,745  

M Large Cap Growth

      4,414,191        1,984,669  

M Large Cap Value

      3,444,163        1,840,206  

Managed Volatility Aggressive Portfolio Series I

      1,619,450        1,032,658  

Managed Volatility Aggressive Portfolio Series NAV

      30,377,856        15,412,797  

Managed Volatility Balanced Portfolio Series I

      6,938,849        8,747,172  

Managed Volatility Balanced Portfolio Series NAV

      61,839,139        31,734,238  

Managed Volatility Conservative Portfolio Series I

      467,800        675,036  

Managed Volatility Conservative Portfolio Series NAV

      5,136,864        4,718,204  

Managed Volatility Growth Portfolio Series I

      9,295,221        5,566,424  

Managed Volatility Growth Portfolio Series NAV

      102,941,436        53,988,238  

Managed Volatility Moderate Portfolio Series I

      1,317,694        1,322,747  

Managed Volatility Moderate Portfolio Series NAV

      16,042,151        16,703,431  

Mid Cap Index Trust Series I

      2,813,895        3,203,283  

Mid Cap Index Trust Series NAV

      15,347,245        9,373,279  

Mid Cap Stock Trust Series I

      4,104,314        3,365,458  

Mid Cap Stock Trust Series NAV

      13,451,055        4,997,865  

Mid Value Trust Series I

      1,438,668        1,574,265  

Mid Value Trust Series NAV

      8,630,356        4,670,977  

Money Market Trust Series I

      14,036,325        10,145,864  

Money-Market Trust Series NAV

      116,872,295        106,225,002  

PIMCO All Asset

      8,436,087        3,148,740  

Real Estate Securities Trust Series I

      685,751        3,952,997  

Real Estate Securities Trust Series NAV

      7,250,887        13,468,074  

Science & Technology Trust Series I

      4,657,173        5,537,756  

Science & Technology Trust Series NAV

      14,070,947        5,482,941  

Select Bond Trust Series I

      243,753        657,767  

Select Bond Trust Series NAV

      4,794,868        3,251,765  

Short Term Government Income Trust Series I

      925,162        1,779,343  

Short Term Government Income Trust Series NAV

      5,438,300        2,929,599  

Small Cap Index Trust Series I

      2,747,320        2,609,983  

Small Cap Index Trust Series NAV

      10,377,497        5,254,291  

Small Cap Opportunities Trust Series I

      6,892,634        4,356,316  

Small Cap Opportunities Trust Series NAV

      8,448,591        6,188,154  

Small Cap Stock Trust Series I

      2,458,317        2,367,712  

Small Cap Stock Trust Series NAV

      6,356,624        5,876,497  

Small Cap Value Trust Series I

      681,318        800,663  

Small Cap Value Trust Series NAV

      9,253,370        5,604,653  

Small Company Value Trust Series I

      1,474,544        1,466,585  

Small Company Value Trust Series NAV

      7,763,473        3,286,207  

Strategic Income Opportunities Trust Series I

      870,145        1,627,875  

Strategic Income Opportunities Trust Series NAV

      8,897,872        4,907,468  

Total Bond Market Series Trust NAV

      5,408,962        2,230,633  

Total Stock Market Index Trust Series I

      1,198,670        1,923,654  

Total Stock Market Index Trust Series NAV

      10,913,395        7,975,537  

Ultra Short Term Bond Trust Series I

      707,499        1,189,945  

Ultra Short Term Bond Trust Series NAV

      2,907,779        1,359,670  

Utilities Trust Series I

      220,183        448,530  

 

62

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

6.

Purchases and Sales of Investments — (continued)

 

     Purchases      Sales  

Sub-Account

      

Utilities Trust Series NAV

    $ 3,348,971      $ 4,095,900  

 

(a)

Terminated as an investment option and funds transferred to Mid Cap Stock Trust Series I on April 27, 2018. The information above represents operations and change in owner’s contract holder equities from beginning of the year through termination date.

 

(b)

Terminated as an investment option and funds transferred to Mid Cap Stock Trust Series NAV on April 27, 2018. The information above represents operations and change in owner’s contract holder equities from beginning of the year through termination date.

 

63

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

7.

Unit Values

A summary of unit values and units outstanding for variable life contracts and the expense and income ratios, excluding expenses of the underlying Portfolios, were as follows:

 

        At December 31,   For the years and periods ended December 31,

Sub-account

   Year   Units
(000s)		   Unit Fair Value
Highest to Lowest(a)		   Assets
(000s)		   Expense Ratio
Highest to Lowest(b)		   Investment
Income Ratio(c)		   Total Return
Highest to Lowest(d)

500 Index Fund Series NAV (*)

       2018         6,704       $  55.90 to $ 34.95       $  333,002         0.00 % to 0.00 %        1.40 %        -4.64 % to -4.65 % 
      2017         6,784         58.62 to 36.65         348,722         0.00 to 0.00         1.83         21.54 to 9.98  
      2016         6,586         48.23 to 30.16         273,254         0.00 to 0.00         1.96         11.64 to 11.64  
      2015         5,508         43.20 to 27.01         203,858         0.00 to 0.00         1.77         1.15 to 1.15  
      2014         5,455         42.71 to 26.70         195,957         0.00 to 0.00         1.69         13.43 to 9.85  

Active Bond Trust Series I (*)

       2018         297         23.74 to 23.74         7,043         0.00 to 0.00         3.36         -0.60 to -0.60  
      2017         271         23.89 to 23.89         6,472         0.00 to 0.00         3.44         4.84 to 4.84  
      2016         329         22.78 to 22.78         7,491         0.00 to 0.00         3.82         4.34 to 4.34  
      2015         306         21.84 to 21.84         6,687         0.00 to 0.00         5.11         0.17 to 0.17  
      2014         318         21.80 to 21.80         6,927         0.00 to 0.00         3.64         6.82 to 6.82  

Active Bond Trust Series NAV (*)

       2018         329         77.56 to 77.56         25,502         0.00 to 0.00         3.23         -0.55 to -0.55  
      2017         339         77.99 to 77.99         26,438         0.00 to 0.00         3.66         4.89 to 1.36  
      2016         301         74.36 to 74.36         22,366         0.00 to 0.00         3.88         4.50 to 4.50  
      2015         267         71.15 to 71.15         19,029         0.00 to 0.00         5.46         0.12 to 0.12  
      2014         209         71.07 to 71.07         14,876         0.00 to 0.00         4.16         6.97 to 2.79  

American Asset Allocation Trust Series I (*)

       2018         6,966         18.46 to 18.46         128,553         0.00 to 0.00         1.68         -4.91 to -4.91  
      2017         6,625         19.41 to 19.41         128,577         0.00 to 0.00         1.29         15.79 to 6.32  
      2016         6,029         16.76 to 16.76         101,053         0.00 to 0.00         1.40         8.99 to 8.99  
      2015         5,264         15.38 to 15.38         80,949         0.00 to 0.00         2.25         1.06 to 1.06  
      2014         4,830         15.22 to 15.22         73,501         0.00 to 0.00         1.78         5.05 to 3.82  

American Global Growth Trust Series I (*)

       2018         694         18.63 to 18.63         12,930         0.00 to 0.00         0.66         -9.37 to -9.37  
      2017         721         20.55 to 20.55         14,814         0.00 to 0.00         0.28         30.92 to 9.48  
      2016         588         15.70 to 15.70         9,238         0.00 to 0.00         1.06         0.29 to 0.29  
      2015         534         15.66 to 15.66         8,354         0.00 to 0.00         1.90         6.64 to 6.64  
      2014         365         14.68 to 14.68         5,353         0.00 to 0.00         0.94         3.55 to 1.97  

American Growth Trust Series I (*)

       2018         2,307         47.01 to 31.23         78,465         0.00 to 0.00         0.38         -0.66 to -0.66  
      2017         2,412         47.32 to 31.43         83,786         0.00 to 0.00         0.37         27.87 to 10.07  
      2016         2,457         37.01 to 24.58         66,671         0.00 to 0.00         0.40         9.08 to 9.07  
      2015         2,485         33.93 to 22.54         62,274         0.00 to 0.00         0.24         6.44 to 6.44  
      2014         2,634         31.88 to 21.17         62,573         0.00 to 0.00         0.84         8.14 to 7.90  

American Growth-Income Trust Series I (*)

       2018         3,246         39.97 to 26.78         100,732         0.00 to 0.00         1.38         -2.18 to -2.18  
      2017         3,585         40.87 to 27.38         113,859         0.00 to 0.00         1.10         22.03 to 10.24  
      2016         3,612         33.49 to 22.44         94,504         0.00 to 0.00         1.67         11.10 to 11.10  
      2015         3,602         30.14 to 20.19         86,236         0.00 to 0.00         1.34         1.11 to 1.11  
      2014         3,706         29.81 to 19.97         88,902         0.00 to 0.00         0.92         10.25 to 7.27  

American International Trust Series I (*)

       2018         2,328         35.98 to 20.44         51,790         0.00 to 0.00         2.82         -13.46 to -13.46  
      2017         2,135         41.58 to 23.62         55,579         0.00 to 0.00         0.95         31.65 to 10.60  
      2016         2,058         31.58 to 17.94         41,108         0.00 to 0.00         1.03         3.12 to 3.12  
      2015         2,038         30.63 to 17.40         39,918         0.00 to 0.00         1.13         -4.82 to -4.82  
      2014         1,879         32.18 to 18.28         39,770         0.00 to 0.00         1.00         -3.05 to -4.20  

Blue Chip Growth Trust Series I (*)

       2018         488         78.14 to 78.14         38,127         0.00 to 0.00         0.02         1.97 to 1.97  
      2017         556         76.63 to 76.63         42,578         0.00 to 0.00         0.07         36.28 to 36.28  
      2016         616         56.23 to 56.23         34,610         0.00 to 0.00         0.01         0.81 to 0.81  
      2015         714         55.78 to 55.78         39,843         0.00 to 0.00         0.00         11.06 to 11.06  
      2014         769         50.22 to 50.22         38,599         0.00 to 0.00         0.00         9.07 to 9.07  

Blue Chip Growth Trust Series NAV (*)

       2018         478         190.64 to 190.64         91,092         0.00 to 0.00         0.06         2.03 to 2.03  
      2017         464         186.84 to 186.84         86,650         0.00 to 0.00         0.12         36.34 to 13.00  
      2016         457         137.04 to 137.04         62,639         0.00 to 0.00         0.05         0.85 to 0.85  
      2015         414         135.88 to 135.88         56,255         0.00 to 0.00         0.00         11.13 to 11.13  
      2014         347         122.28 to 122.28         42,434         0.00 to 0.00         0.00         11.16 to 9.11  

Capital Appreciation Trust Series I (*)

       2018         721         37.00 to 37.00         26,690         0.00 to 0.00         0.27         -0.80 to -0.80  
      2017         791         37.30 to 37.30         29,496         0.00 to 0.00         0.06         36.53 to 36.53  
      2016         863         27.32 to 27.32         23,584         0.00 to 0.00         0.00         -1.08 to -1.08  
      2015         1,005         27.61 to 27.61         27,741         0.00 to 0.00         0.00         11.45 to 11.45  
      2014         1,106         24.78 to 24.78         27,404         0.00 to 0.00         0.05         9.65 to 9.65  

Capital Appreciation Trust Series NAV (*)

       2018         900         36.38 to 36.38         32,748         0.00 to 0.00         0.36         -0.72 to -0.72  
      2017         877         36.64 to 36.64         32,135         0.00 to 0.00         0.11         36.51 to 14.35  
      2016         812         26.84 to 26.84         21,802         0.00 to 0.00         0.01         -1.00 to -1.00  
      2015         803         27.11 to 27.11         21,769         0.00 to 0.00         0.02         11.47 to 11.47  
      2014         834         24.32 to 24.32         20,287         0.00 to 0.00         0.09         11.81 to 9.68  

Capital Appreciation Value Trust Series I (*)

       2018         108         23.01 to 23.01         2,491         0.00 to 0.00         2.14         0.39 to 0.39  
      2017         125         22.92 to 22.92         2,863         0.00 to 0.00         1.48         15.14 to 15.14  
      2016         132         19.90 to 19.90         2,620         0.00 to 0.00         1.61         8.12 to 8.12  
      2015         54         18.41 to 18.41         988         0.00 to 0.00         1.27         5.28 to 5.28  
      2014         63         17.48 to 17.48         1,096         0.00 to 0.00         1.30         12.22 to 12.22  

 

64

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

7.

Unit Values — (continued)

 

        At December 31,   For the years and periods ended December 31,

Sub-account

   Year   Units
(000s)		   Unit Fair Value
Highest to Lowest(a)		   Assets
(000s)		   Expense Ratio
Highest to Lowest(b)		   Investment
Income Ratio(c)		   Total Return
Highest to Lowest(d)

Capital Appreciation Value Trust Series NAV (*)

       2018         3,058       $ 23.09 to $ 23.09       $ 70,629         0.00 % to 0.00 %        2.26 %        0.45 % to 0.45 % 
      2017         3,101         22.99 to 22.99         71,301         0.00 to 0.00         1.57         15.13 to 4.72  
      2016         2,711         19.97 to 19.97         54,138         0.00 to 0.00         1.58         8.19 to 8.19  
      2015         1,782         18.46 to 18.46         32,897         0.00 to 0.00         1.30         5.27 to 5.27  
      2014         1,340         17.54 to 17.54         23,505         0.00 to 0.00         1.61         12.38 to 7.58  

Core Bond Trust Series I (*)

       2018         719         21.45 to 21.45         15,421         0.00 to 0.00         2.39         -0.59 to -0.59  
      2017         804         21.58 to 21.58         17,353         0.00 to 0.00         2.11         3.40 to 3.40  
      2016         857         20.87 to 20.87         17,879         0.00 to 0.00         1.93         2.74 to 2.74  
      2015         960         20.31 to 20.31         19,495         0.00 to 0.00         2.31         0.31 to 0.31  
      2014         66         20.25 to 20.25         1,334         0.00 to 0.00         3.07         5.93 to 5.93  

Core Bond Trust Series NAV (*)

       2018         3,545         17.25 to 17.25         61,160         0.00 to 0.00         2.54         -0.54 to -0.54  
      2017         3,874         17.35 to 17.35         67,203         0.00 to 0.00         2.24         3.47 to 0.84  
      2016         3,635         16.76 to 16.76         60,928         0.00 to 0.00         2.10         2.73 to 2.73  
      2015         3,255         16.32 to 16.32         53,124         0.00 to 0.00         2.28         0.36 to 0.36  
      2014         397         16.26 to 16.26         6,459         0.00 to 0.00         3.62         6.01 to 2.87  

Emerging Markets Value Trust Series I (*)

       2018         328         15.44 to 15.44         5,070         0.00 to 0.00         2.56         -13.59 to -13.59  
      2017         348         17.87 to 17.87         6,225         0.00 to 0.00         2.15         32.69 to 32.69  
      2016         202         13.47 to 13.47         2,721         0.00 to 0.00         2.16         18.00 to 18.00  
      2015         189         11.41 to 11.41         2,155         0.00 to 0.00         2.03         -19.07 to -19.07  
      2014         198         14.10 to 14.10         2,786         0.00 to 0.00         1.86         -5.50 to -5.50  

Emerging Markets Value Trust Series NAV (*)

       2018         4,738         12.43 to 12.43         58,883         0.00 to 0.00         2.72         -13.48 to -13.48  
      2017         4,325         14.36 to 14.36         62,118         0.00 to 0.00         2.07         32.67 to 13.66  
      2016         2,747         10.83 to 10.83         29,733         0.00 to 0.00         2.26         18.09 to 18.09  
      2015         2,481         9.17 to 9.17         22,747         0.00 to 0.00         2.19         -19.05 to -19.05  
      2014         2,052         11.32 to 11.32         23,237         0.00 to 0.00         2.00         -5.37 to -7.51  

Equity Income Trust Series I (*)

       2018         628         53.61 to 53.61         33,645         0.00 to 0.00         1.81         -9.58 to -9.58  
      2017         733         59.29 to 59.29         43,432         0.00 to 0.00         2.26         16.29 to 16.29  
      2016         794         50.99 to 50.99         40,460         0.00 to 0.00         2.21         19.13 to 19.13  
      2015         892         42.80 to 42.80         38,190         0.00 to 0.00         1.89         -6.75 to -6.75  
      2014         990         45.90 to 45.90         45,429         0.00 to 0.00         1.82         7.47 to 7.47  

Equity Income Trust Series NAV (*)

       2018         1,257         53.66 to 53.66         67,422         0.00 to 0.00         1.93         -9.52 to -9.52  
      2017         1,270         59.30 to 59.30         75,291         0.00 to 0.00         2.32         16.28 to 9.05  
      2016         1,360         51.00 to 51.00         69,339         0.00 to 0.00         2.35         19.18 to 19.18  
      2015         1,416         42.79 to 42.79         60,573         0.00 to 0.00         1.99         -6.66 to -6.66  
      2014         1,475         45.85 to 45.85         67,616         0.00 to 0.00         1.93         7.55 to 4.38  

Financial Industries Trust Series I (*)

       2018         88         27.10 to 27.10         2,373         0.00 to 0.00         1.07         -14.49 to -14.49  
      2017         108         31.69 to 31.69         3,411         0.00 to 0.00         1.12         15.29 to 15.29  
      2016         163         27.49 to 27.49         4,468         0.00 to 0.00         1.40         19.37 to 19.37  
      2015         115         23.03 to 23.03         2,647         0.00 to 0.00         0.99         -2.65 to -2.65  
      2014         119         23.65 to 23.65         2,807         0.00 to 0.00         0.73         8.65 to 8.65  

Financial Industries Trust Series NAV (*)

       2018         287         32.70 to 32.70         9,396         0.00 to 0.00         1.17         -14.38 to -14.38  
      2017         312         38.19 to 38.19         11,918         0.00 to 0.00         1.31         15.29 to 9.22  
      2016         300         33.13 to 33.13         9,927         0.00 to 0.00         1.56         19.47 to 19.47  
      2015         275         27.73 to 27.73         7,636         0.00 to 0.00         1.15         -2.58 to -2.58  
      2014         218         28.46 to 28.46         6,196         0.00 to 0.00         0.80         8.64 to 6.56  

Fundamental All Cap Core Trust Series I (*)

       2018         22         45.57 to 45.57         1,023         0.00 to 0.00         0.41         -13.16 to -13.16  
      2017         27         52.48 to 52.48         1,407         0.00 to 0.00         0.75         27.70 to 27.70  
      2016         26         41.10 to 41.10         1,085         0.00 to 0.00         0.59         8.34 to 8.34  
      2015         27         37.93 to 37.93         1,011         0.00 to 0.00         0.00         4.01 to 4.01  
      2014         25         36.47 to 36.47         896         0.00 to 0.00         0.33         9.75 to 9.75  

Fundamental All Cap Core Trust Series NAV (*)

       2018         694         27.11 to 27.11         18,813         0.00 to 0.00         0.49         -13.16 to -13.16  
      2017         618         31.22 to 31.22         19,288         0.00 to 0.00         0.81         27.77 to 14.16  
      2016         599         24.44 to 24.44         14,635         0.00 to 0.00         0.70         8.40 to 8.40  
      2015         583         22.55 to 22.55         13,149         0.00 to 0.00         0.00         4.09 to 4.09  
      2014         561         21.66 to 21.66         12,145         0.00 to 0.00         0.46         11.86 to 9.81  

Fundamental Large Cap Value Trust Series I (*)

       2018         919         30.10 to 30.10         27,663         0.00 to 0.00         1.08         -17.03 to -17.03  
      2017         1,021         36.28 to 36.28         37,050         0.00 to 0.00         1.60         17.43 to 17.43  
      2016         1,166         30.90 to 30.90         36,042         0.00 to 0.00         2.24         10.17 to 10.17  
      2015         1,291         28.05 to 28.05         36,204         0.00 to 0.00         0.99         -1.11 to -1.11  
      2014         1,394         28.36 to 28.36         39,538         0.00 to 0.00         1.95         10.61 to 10.61  

Fundamental Large Cap Value Trust Series NAV (*)

       2018         2,045         21.23 to 21.23         43,431         0.00 to 0.00         1.22         -17.03 to -17.03  
      2017         1,874         25.59 to 25.59         47,967         0.00 to 0.00         1.72         17.54 to 9.65  
      2016         1,861         21.77 to 21.77         40,527         0.00 to 0.00         2.31         10.21 to 10.21  
      2015         1,887         19.75 to 19.75         37,270         0.00 to 0.00         1.11         -1.06 to -1.06  
      2014         1,692         19.96 to 19.96         33,776         0.00 to 0.00         1.11         10.66 to 7.82  

 

65

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

7.

Unit Values — (continued)

 

        At December 31,   For the years and periods ended December 31,

Sub-account

   Year   Units
(000s)		   Unit Fair Value
Highest to Lowest(a)		   Assets
(000s)		   Expense Ratio
Highest to Lowest(b)		   Investment
Income Ratio(c)		   Total Return
Highest to Lowest(d)

Global Bond Trust Series I (*)

       2018         142       $ 32.57 to $ 32.57       $ 4,624         0.00 % to 0.00 %        2.67 %        -1.90 % to -1.90 % 
      2017         148         33.20 to 33.20         4,904         0.00 to 0.00         2.21         8.75 to 8.75  
      2016         169         30.53 to 30.53         5,168         0.00 to 0.00         0.00         3.05 to 3.05  
      2015         178         29.63 to 29.63         5,266         0.00 to 0.00         2.49         -3.50 to -3.50  
      2014         197         30.70 to 30.70         6,058         0.00 to 0.00         0.90         2.28 to 2.28  

Global Bond Trust Series NAV (*)

       2018         1,106         32.75 to 32.75         36,212         0.00 to 0.00         2.82         -1.74 to -1.74  
      2017         864         33.33 to 33.33         28,800         0.00 to 0.00         2.38         8.71 to 3.58  
      2016         874         30.66 to 30.66         26,791         0.00 to 0.00         0.00         3.15 to 3.15  
      2015         777         29.73 to 29.73         23,090         0.00 to 0.00         2.63         -3.51 to -3.51  
      2014         754         30.81 to 30.81         23,227         0.00 to 0.00         1.00         2.42 to -1.88  

Global Trust Series I (*)

       2018         284         33.23 to 33.23         9,424         0.00 to 0.00         1.77         -14.49 to -14.49  
      2017         313         38.86 to 38.86         12,176         0.00 to 0.00         1.91         18.88 to 18.88  
      2016         335         32.69 to 32.69         10,956         0.00 to 0.00         4.53         9.46 to 9.46  
      2015         364         29.86 to 29.86         10,859         0.00 to 0.00         1.87         -6.42 to -6.42  
      2014         413         31.91 to 31.91         13,193         0.00 to 0.00         3.12         -2.60 to -2.60  

Global Trust Series NAV (*)

       2018         1,475         18.01 to 18.01         26,553         0.00 to 0.00         1.86         -14.42 to -14.42  
      2017         1,515         21.04 to 21.04         31,879         0.00 to 0.00         1.96         18.90 to 7.34  
      2016         1,558         17.70 to 17.70         27,563         0.00 to 0.00         4.64         9.46 to 9.46  
      2015         1,602         16.17 to 16.17         25,903         0.00 to 0.00         2.01         -6.33 to -6.33  
      2014         1,728         17.26 to 17.26         29,822         0.00 to 0.00         6.16         -2.51 to -6.31  

Health Sciences Trust Series I (*)

       2018         131         89.34 to 89.34         11,663         0.00 to 0.00         0.00         0.69 to 0.69  
      2017         156         88.73 to 88.73         13,855         0.00 to 0.00         0.00         27.51 to 27.51  
      2016         139         69.59 to 69.59         9,670         0.00 to 0.00         0.06         -10.57 to -10.57  
      2015         163         77.81 to 77.81         12,695         0.00 to 0.00         0.00         12.69 to 12.69  
      2014         215         69.05 to 69.05         14,819         0.00 to 0.00         0.00         31.83 to 31.83  

Health Sciences Trust Series NAV (*)

       2018         636         69.79 to 69.79         44,387         0.00 to 0.00         0.00         0.76 to 0.76  
      2017         607         69.27 to 69.27         42,047         0.00 to 0.00         0.00         27.61 to 8.33  
      2016         636         54.28 to 54.28         34,511         0.00 to 0.00         0.11         -10.54 to -10.54  
      2015         635         60.67 to 60.67         38,510         0.00 to 0.00         0.00         12.76 to 12.76  
      2014         556         53.81 to 53.81         29,900         0.00 to 0.00         0.00         31.85 to 25.97  

High Yield Trust Series I (*)

       2018         312         35.57 to 35.57         11,108         0.00 to 0.00         5.98         -3.01 to -3.01  
      2017         366         36.68 to 36.68         13,429         0.00 to 0.00         5.49         7.50 to 7.50  
      2016         376         34.12 to 34.12         12,841         0.00 to 0.00         6.98         16.26 to 16.26  
      2015         402         29.35 to 29.35         11,811         0.00 to 0.00         7.29         -8.32 to -8.32  
      2014         440         32.01 to 32.01         14,093         0.00 to 0.00         6.55         0.11 to 0.11  

High Yield Trust Series NAV (*)

       2018         1,301         23.52 to 23.52         30,597         0.00 to 0.00         6.20         -3.02 to -3.02  
      2017         1,313         24.25 to 24.25         31,838         0.00 to 0.00         5.67         7.46 to 2.50  
      2016         1,277         22.57 to 22.57         28,818         0.00 to 0.00         7.22         16.56 to 16.56  
      2015         1,253         19.36 to 19.36         24,252         0.00 to 0.00         7.70         -8.38 to -8.38  
      2014         1,232         21.14 to 21.14         26,044         0.00 to 0.00         6.90         0.00 to -3.67  

International Equity Index Series I (*)

       2018         905         12.45 to 12.45         11,271         0.00 to 0.00         2.25         -14.10 to -14.10  
      2017         1,025         14.49 to 14.49         14,855         0.00 to 0.00         2.23         27.30 to 27.30  
      2016         983         11.39 to 11.39         11,186         0.00 to 0.00         2.65         4.45 to 4.45  
      2015         1,053         10.90 to 10.90         11,479         0.00 to 0.00         2.36         -5.91 to -5.91  
      2014         1,081         11.58 to 11.58         12,520         0.00 to 0.00         3.02         -4.61 to -4.61  

International Equity Index Series NAV (*)

       2018         1,515         48.91 to 48.91         74,077         0.00 to 0.00         2.50         -14.10 to -14.10  
      2017         1,283         56.94 to 56.94         73,049         0.00 to 0.00         2.33         27.45 to 10.35  
      2016         1,121         44.68 to 44.68         50,084         0.00 to 0.00         2.77         4.43 to 4.43  
      2015         1,034         42.78 to 42.78         44,230         0.00 to 0.00         2.59         -5.80 to -5.80  
      2014         865         45.42 to 45.42         39,290         0.00 to 0.00         3.28         -4.57 to -7.23  
                           

International Growth Stock Trust Series I (*)

       2018         187         12.49 to 12.49         2,334         0.00 to 0.00         1.57         -14.43 to -14.43  
      2017         200         14.60 to 14.60         2,917         0.00 to 0.00         1.42         21.86 to 21.86  
      2016         194         11.98 to 11.98         2,326         0.00 to 0.00         1.82         -1.31 to -1.31  
      2015         135         12.14 to 12.14         1,644         0.00 to 0.00         1.62         -2.27 to -2.27  
      2014         152         12.42 to 12.42         1,892         0.00 to 0.00         1.77         0.20 to 0.20  

International Growth Stock Trust Series NAV (*)

       2018         1,205         12.53 to 12.53         15,098         0.00 to 0.00         1.68         -14.43 to -14.43  
      2017         1,238         14.64 to 14.64         18,120         0.00 to 0.00         1.48         21.90 to 6.70  
      2016         1,173         12.01 to 12.01         14,093         0.00 to 0.00         1.95         -1.19 to -1.19  
      2015         820         12.16 to 12.16         9,961         0.00 to 0.00         1.86         -2.23 to -2.23  
      2014         656         12.43 to 12.43         8,153         0.00 to 0.00         1.93         0.19 to -2.81  

International Small Company Trust Series I (*)

       2018         328         16.38 to 16.38         5,370         0.00 to 0.00         1.09         -20.10 to -20.10  
      2017         457         20.50 to 20.50         9,371         0.00 to 0.00         1.48         29.45 to 29.45  
      2016         373         15.83 to 15.83         5,904         0.00 to 0.00         2.13         4.90 to 4.90  
      2015         391         15.09 to 15.09         5,896         0.00 to 0.00         1.69         6.54 to 6.54  
      2014         427         14.17 to 14.17         6,043         0.00 to 0.00         1.26         -6.89 to -6.89  

 

66

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

7.

Unit Values — (continued)

 

        At December 31,   For the years and periods ended December 31,

Sub-account

   Year   Units
(000s)		   Unit Fair Value
Highest to Lowest(a)		   Assets
(000s)		   Expense Ratio
Highest to Lowest(b)		   Investment
Income Ratio(c)		   Total Return
Highest to Lowest(d)

International Small Company Trust Series NAV (*)

       2018         1,548       $ 16.45 to $ 16.45       $ 25,468         0.00 % to 0.00 %        1.26 %        -20.07 % to -20.07 % 
      2017         1,417         20.59 to 20.59         29,174         0.00 to 0.00         1.52         29.59 to 11.75  
      2016         1,306         15.89 to 15.89         20,743         0.00 to 0.00         2.04         4.95 to 4.95  
      2015         1,282         15.14 to 15.14         19,406         0.00 to 0.00         1.97         6.68 to 6.68  
      2014         878         14.19 to 14.19         12,457         0.00 to 0.00         1.50         -6.85 to -10.48  

International Value Trust Series I (*)

       2018         787         24.66 to 24.66         19,400         0.00 to 0.00         2.42         -15.03 to -15.03  
      2017         866         29.03 to 29.03         25,121         0.00 to 0.00         1.77         17.14 to 17.14  
      2016         1,005         24.78 to 24.78         24,904         0.00 to 0.00         3.47         12.24 to 12.24  
      2015         535         22.08 to 22.08         11,804         0.00 to 0.00         1.79         -7.81 to -7.81  
      2014         623         23.95 to 23.95         14,924         0.00 to 0.00         2.80         -12.51 to -12.51  

International Value Trust Series NAV (*)

       2018         2,383         15.94 to 15.94         37,995         0.00 to 0.00         2.61         -14.96 to -14.96  
      2017         2,312         18.75 to 18.75         43,337         0.00 to 0.00         1.94         17.25 to 5.47  
      2016         2,242         15.99 to 15.99         35,853         0.00 to 0.00         3.12         12.20 to 12.20  
      2015         1,336         14.25 to 14.25         19,037         0.00 to 0.00         1.96         -7.72 to -7.72  
      2014         1,399         15.44 to 15.44         21,595         0.00 to 0.00         3.03         -12.47 to -14.40  

Investment Quality Bond Trust Series I (*)

       2018         258         36.35 to 36.35         9,363         0.00 to 0.00         2.70         -0.82 to -0.82  
      2017         280         36.65 to 36.65         10,249         0.00 to 0.00         2.62         4.61 to 4.61  
      2016         297         35.03 to 35.03         10,410         0.00 to 0.00         2.27         4.29 to 4.29  
      2015         321         33.59 to 33.59         10,794         0.00 to 0.00         1.82         -0.82 to -0.82  
      2014         361         33.87 to 33.87         12,238         0.00 to 0.00         2.96         5.48 to 5.48  

Investment Quality Bond Trust Series NAV (*)

       2018         1,033         17.20 to 17.20         17,772         0.00 to 0.00         2.84         -0.67 to -0.67  
      2017         967         17.32 to 17.32         16,752         0.00 to 0.00         2.90         4.67 to 1.34  
      2016         763         16.55 to 16.55         12,629         0.00 to 0.00         2.51         4.26 to 4.26  
      2015         674         15.87 to 15.87         10,698         0.00 to 0.00         1.99         -0.68 to -0.68  
      2014         534         15.98 to 15.98         8,529         0.00 to 0.00         3.30         5.54 to 2.04  

Lifestyle Aggressive Portfolio Series NAV (*)

       2018         814         12.94 to 12.94         10,528         0.00 to 0.00         2.30         -8.87 to -8.87  
      2017         455         14.20 to 14.20         6,467         0.00 to 0.00         2.07         21.85 to 21.85  
      2016         196         11.65 to 11.65         2,279         0.00 to 0.00         2.87         9.59 to 9.59  
      2015         80         10.63 to 10.63         853         0.00 to 0.00         2.03         -1.51 to -1.51  
      2014         48         10.80 to 10.80         523         0.00 to 0.00         5.68         5.46 to 5.46  

Lifestyle Balanced Portfolio Series NAV (*)

       2018         5,873         12.24 to 12.24         71,880         0.00 to 0.00         2.61         -3.29 to -4.39  
      2017         5,051         12.80 to 12.80         64,648         0.00 to 0.00         2.54         12.38 to 4.70  
      2016         4,011         11.39 to 11.39         45,689         0.00 to 0.00         2.94         6.17 to 6.17  
      2015         2,450         10.73 to 10.73         26,281         0.00 to 0.00         3.78         0.10 to 0.10  
      2014         961         10.72 to 10.72         10,303         0.00 to 0.00         8.80         5.94 to 5.94  

Lifestyle Conservative Portfolio Series NAV (*)

       2018         364         11.62 to 11.62         4,235         0.00 to 0.00         2.83         -0.28 to -1.92  
      2017         304         11.85 to 11.85         3,601         0.00 to 0.00         2.85         7.01 to 2.40  
      2016         258         11.07 to 11.07         2,857         0.00 to 0.00         5.16         4.36 to 4.36  
      2015         58         10.61 to 10.61         618         0.00 to 0.00         3.23         0.22 to 0.22  
      2014         18         10.59 to 10.59         191         0.00 to 0.00         8.91         5.67 to 5.67  

Lifestyle Growth Portfolio Series I (*)

       2018         100         11.12 to 11.12         1,107         0.00 to 0.00         1.83         -6.11 to -6.11  
      2017         133         11.85 to 11.85         1,580         0.00 to 0.00         4.18         16.14 to 16.14  
      2016         49         10.20 to 10.20         501         0.00 to 0.00         9.77         1.99 to 1.99  

Lifestyle Growth Portfolio Series NAV (*)

       2018         24,249         12.64 to 12.64         306,636         0.00 to 0.00         2.29         -6.07 to -6.07  
      2017         23,203         13.46 to 13.46         312,362         0.00 to 0.00         3.90         16.20 to 6.72  
      2016         8,684         11.59 to 11.59         100,607         0.00 to 0.00         3.93         7.22 to 1.99  
      2015         2,723         10.81 to 10.81         29,423         0.00 to 0.00         3.36         0.00 to 0.00  
      2014         1,093         10.81 to 10.81         11,808         0.00 to 0.00         7.60         6.23 to 6.23  

Lifestyle Moderate Portfolio Series NAV (*)

       2018         1,776         12.04 to 12.04         21,382         0.00 to 0.00         2.73         -2.24 to -3.53  
      2017         1,505         12.48 to 12.48         18,784         0.00 to 0.00         2.71         10.56 to 3.93  
      2016         1,181         11.29 to 11.29         13,334         0.00 to 0.00         3.26         5.54 to 5.54  
      2015         673         10.69 to 10.69         7,196         0.00 to 0.00         3.93         0.14 to 0.14  
      2014         269         10.68 to 10.68         2,874         0.00 to 0.00         8.70         5.88 to 5.88  

M Capital Appreciation

       2018         136         98.31 to 98.31         13,343         0.00 to 0.00         0.29         -14.15 to -14.15  
      2017         141         114.51 to 114.51         16,198         0.00 to 0.00         0.00         19.02 to 19.02  
      2016         151         96.21 to 96.21         14,508         0.00 to 0.00         0.00         21.06 to 21.06  
      2015         151         79.47 to 79.47         11,986         0.00 to 0.00         0.00         -6.58 to -6.58  
      2014         128         85.07 to 85.07         10,873         0.00 to 0.00         0.00         12.42 to 9.01  

M International Equity

       2018         253         31.26 to 31.26         7,897         0.00 to 0.00         1.24         -20.57 to -20.57  
      2017         371         39.36 to 39.36         14,614         0.00 to 0.00         1.70         24.05 to 5.64  
      2016         368         31.73 to 31.73         11,682         0.00 to 0.00         1.14         -0.05 to -0.05  
      2015         409         31.74 to 31.74         12,973         0.00 to 0.00         1.90         -3.94 to -3.94  
      2014         328         33.05 to 33.05         10,847         0.00 to 0.00         2.37         -7.06 to -10.07  

M Large Cap Growth

       2018         226         69.77 to 69.77         15,767         0.00 to 0.00         0.00         -4.95 to -4.95  
      2017         218         73.41 to 73.41         15,980         0.00 to 0.00         0.00         38.97 to 38.97  

 

67

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

7.

Unit Values — (continued)

 

        At December 31,   For the years and periods ended December 31,

Sub-account

   Year   Units
(000s)		   Unit Fair Value
Highest to Lowest(a)		   Assets
(000s)		   Expense Ratio
Highest to Lowest(b)		   Investment
Income Ratio(c)		   Total Return
Highest to Lowest(d)

M Large Cap Growth

       2016         237       $ 52.82 to $52.82       $ 12,511         0.00 % to 0.00 %        0.00         -2.32 % to -2.32 % 
      2015         243         54.08 to 54.08         13,154         0.00 to 0.00         0.03         7.70 to 7.70  
      2014         250         50.21 to 50.21         12,528         0.00 to 0.00         0.04         12.53 to 10.21  

M Large Cap Value

       2018         470         26.27 to 26.27         12,335         0.00 to 0.00         1.49         -12.07 to -12.07  
      2017         456         29.87 to 29.87         13,609         0.00 to 0.00         1.52         14.99 to 14.99  
      2016         451         25.98 to 25.98         11,704         0.00 to 0.00         2.03         9.64 to 9.64  
      2015         423         23.69 to 23.69         10,016         0.00 to 0.00         1.37         -0.66 to -0.66  
      2014         396         23.85 to 23.85         9,439         0.00 to 0.00         1.26         9.68 to 5.84  

Managed Volatility Aggressive Portfolio Series I (*)

       2018         374         33.62 to 33.62         12,566         0.00 to 0.00         2.01         -8.46 to -8.46  
      2017         390         36.73 to 36.73         14,339         0.00 to 0.00         1.70         22.82 to 22.82  
      2016         451         29.91 to 29.91         13,493         0.00 to 0.00         1.67         1.95 to 1.95  
      2015         487         29.33 to 29.33         14,299         0.00 to 0.00         1.95         -5.85 to -5.85  
      2014         529         31.15 to 31.15         16,492         0.00 to 0.00         2.53         1.40 to 1.40  

Managed Volatility Aggressive Portfolio Series
NAV (*)

       2018         8,655         20.19 to 20.19         174,787         0.00 to 0.00         2.09         -8.32 to -8.32  
      2017         8,724         22.03 to 22.03         192,188         0.00 to 0.00         1.83         22.88 to 9.63  
      2016         9,109         17.93 to 17.93         163,300         0.00 to 0.00         1.71         1.89 to 1.89  
      2015         9,422         17.59 to 17.59         165,762         0.00 to 0.00         2.05         -5.79 to -5.79  
      2014         9,406         18.67 to 18.67         175,656         0.00 to 0.00         2.92         1.54 to 0.53  

Managed Volatility Balanced Portfolio Series I (*)

       2018         1,333         39.31 to 39.31         52,411         0.00 to 0.00         2.21         -4.88 to -4.88  
      2017         1,500         41.33 to 41.33         62,006         0.00 to 0.00         2.26         14.13 to 14.13  
      2016         1,543         36.21 to 36.21         55,881         0.00 to 0.00         2.05         4.79 to 4.79  
      2015         1,693         34.55 to 34.55         58,486         0.00 to 0.00         2.35         -2.25 to -2.25  
      2014         1,838         35.35 to 35.35         64,961         0.00 to 0.00         2.83         4.29 to 4.29  

Managed Volatility Balanced Portfolio Series NAV (*)

       2018         21,264         19.58 to 19.58         416,483         0.00 to 0.00         2.38         -4.82 to -4.82  
      2017         21,747         20.58 to 20.58         447,517         0.00 to 0.00         2.28         14.15 to 5.83  
      2016         22,207         18.02 to 18.02         400,325         0.00 to 0.00         2.20         4.91 to 4.91  
      2015         22,063         17.18 to 17.18         379,093         0.00 to 0.00         2.52         -2.20 to -2.20  
      2014         21,988         17.57 to 17.57         386,294         0.00 to 0.00         3.02         4.25 to 1.81  

Managed Volatility Conservative Portfolio Series I (*)

       2018         74         38.70 to 38.70         2,870         0.00 to 0.00         2.47         -2.18 to -2.18  
      2017         84         39.56 to 39.56         3,314         0.00 to 0.00         2.44         7.82 to 7.82  
      2016         90         36.69 to 36.69         3,292         0.00 to 0.00         2.24         4.58 to 4.58  
      2015         109         35.09 to 35.09         3,825         0.00 to 0.00         2.55         0.05 to 0.05  
      2014         119         35.07 to 35.07         4,177         0.00 to 0.00         2.56         5.02 to 5.02  

Managed Volatility Conservative Portfolio Series
NAV (*)

       2018         1,822         18.13 to 18.13         33,036         0.00 to 0.00         2.64         -2.21 to -2.21  
      2017         1,904         18.54 to 18.54         35,299         0.00 to 0.00         2.57         7.94 to 2.95  
      2016         1,978         17.17 to 17.17         33,973         0.00 to 0.00         2.41         4.53 to 4.53  
      2015         1,979         16.43 to 16.43         32,516         0.00 to 0.00         2.57         0.18 to 0.18  
      2014         2,049         16.40 to 16.40         33,614         0.00 to 0.00         3.02         4.98 to 2.14  

Managed Volatility Growth Portfolio Series I (*)

       2018         1,771         36.75 to 36.75         65,071         0.00 to 0.00         2.11         -6.54 to -6.54  
      2017         1,865         39.32 to 39.32         73,320         0.00 to 0.00         1.96         18.58 to 18.58  
      2016         2,108         33.16 to 33.16         69,872         0.00 to 0.00         1.82         3.34 to 3.34  
      2015         2,344         32.08 to 32.08         75,182         0.00 to 0.00         2.08         -4.53 to -4.53  
      2014         2,599         33.61 to 33.61         87,346         0.00 to 0.00         2.68         2.16 to 2.16  

Managed Volatility Growth Portfolio Series NAV (*)

       2018         29,490         19.72 to 19.72         581,696         0.00 to 0.00         2.19         -6.56 to -6.56  
      2017         30,337         21.11 to 21.11         640,384         0.00 to 0.00         2.10         18.71 to 7.84  
      2016         30,781         17.78 to 17.78         547,356         0.00 to 0.00         1.95         3.38 to 3.38  
      2015         31,216         17.20 to 17.20         536,932         0.00 to 0.00         2.30         -4.55 to -4.55  
      2014         30,578         18.02 to 18.02         551,018         0.00 to 0.00         2.94         2.28 to 0.59  

Managed Volatility Moderate Portfolio Series I (*)

       2018         314         40.24 to 40.24         12,647         0.00 to 0.00         2.40         -3.98 to -3.98  
      2017         342         41.91 to 41.91         14,344         0.00 to 0.00         2.30         11.88 to 11.88  
      2016         364         37.46 to 37.46         13,629         0.00 to 0.00         2.13         5.30 to 5.30  
      2015         380         35.58 to 35.58         13,519         0.00 to 0.00         2.40         -0.91 to -0.91  
      2014         428         35.90 to 35.90         15,384         0.00 to 0.00         2.60         4.94 to 4.94  

Managed Volatility Moderate Portfolio Series NAV (*)

       2018         4,706         19.40 to 19.40         91,292         0.00 to 0.00         2.39         -3.93 to -3.93  
      2017         5,140         20.19 to 20.19         103,792         0.00 to 0.00         2.62         12.02 to 4.82  
      2016         4,728         18.03 to 18.03         85,239         0.00 to 0.00         2.23         5.25 to 5.25  
      2015         4,737         17.13 to 17.13         81,140         0.00 to 0.00         2.61         -0.86 to -0.86  
      2014         4,639         17.27 to 17.27         80,144         0.00 to 0.00         3.06         4.99 to 2.38  

Mid Cap Index Trust Series I (*)

       2018         471         50.49 to 50.49         23,800         0.00 to 0.00         1.09         -11.46 to -11.46  
      2017         517         57.02 to 57.02         29,470         0.00 to 0.00         0.59         15.81 to 15.81  
      2016         322         49.24 to 49.24         15,865         0.00 to 0.00         1.16         20.11 to 20.11  
      2015         315         40.99 to 40.99         12,931         0.00 to 0.00         1.00         -2.60 to -2.60  
      2014         343         42.08 to 42.08         14,446         0.00 to 0.00         0.96         9.35 to 9.35  

Mid Cap Index Trust Series NAV (*)

       2018         1,815         33.16 to 33.16         60,187         0.00 to 0.00         1.18         -11.45 to -11.45  
      2017         1,805         37.45 to 37.45         67,589         0.00 to 0.00         0.60         15.86 to 8.44  

 

68

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

7.

Unit Values — (continued)

 

        At December 31,   For the years and periods ended December 31,

Sub-account

   Year   Units
(000s)		   Unit Fair Value
Highest to Lowest(a)		   Assets
(000s)		   Expense Ratio
Highest to Lowest(b)		   Investment
Income Ratio(c)		   Total Return
Highest to Lowest(d)

Mid Cap Index Trust Series NAV (*)

       2016         1,331       $ 32.32 to $32.32       $ 43,027         0.00 % to 0.00 %        1.33 %        20.17 % to 20.17 % 
      2015         1,180         26.89 to 26.89         31,748         0.00 to 0.00         1.10         -2.54 to -2.54  
      2014         1,111         27.60 to 27.60         30,659         0.00 to 0.00         1.10         9.40 to 6.47  

Mid Cap Stock Trust Series I (*)

       2018         441         44.40 to 44.40         19,577         0.00 to 0.00         0.00         -1.56 to -1.56  
      2017         476         45.10 to 45.10         21,464         0.00 to 0.00         0.00         28.54 to 28.54  
      2016         522         35.09 to 35.09         18,317         0.00 to 0.00         0.00         0.59 to 0.59  
      2015         578         34.88 to 34.88         20,174         0.00 to 0.00         0.00         3.00 to 3.00  
      2014         644         33.87 to 33.87         21,808         0.00 to 0.00         0.10         8.02 to 8.02  

Mid Cap Stock Trust Series NAV (*)

       2018         356         96.79 to 96.79         34,453         0.00 to 0.00         0.00         -1.54 to -1.54  
      2017         314         98.30 to 98.30         30,903         0.00 to 0.00         0.00         28.66 to 8.17  
      2016         321         76.41 to 76.41         24,502         0.00 to 0.00         0.00         0.58 to 0.58  
      2015         347         75.96 to 75.96         26,363         0.00 to 0.00         0.00         3.04 to 3.04  
      2014         317         73.72 to 73.72         23,349         0.00 to 0.00         0.15         9.25 to 8.11  

Mid Value Trust Series I (*)

       2018         353         30.91 to 30.91         10,921         0.00 to 0.00         0.77         -10.84 to -10.84  
      2017         389         34.67 to 34.67         13,495         0.00 to 0.00         0.97         11.43 to 11.43  
      2016         453         31.12 to 31.12         14,082         0.00 to 0.00         1.14         24.02 to 24.02  
      2015         482         25.09 to 25.09         12,092         0.00 to 0.00         1.11         -3.43 to -3.43  
      2014         521         25.98 to 25.98         13,539         0.00 to 0.00         0.72         10.60 to 10.60  

Mid Value Trust Series NAV (*)

       2018         566         47.62 to 47.62         26,967         0.00 to 0.00         0.85         -10.68 to -10.68  
      2017         542         53.32 to 53.32         28,889         0.00 to 0.00         1.06         11.46 to 8.00  
      2016         560         47.84 to 47.84         26,795         0.00 to 0.00         1.29         24.09 to 24.09  
      2015         479         38.55 to 38.55         18,472         0.00 to 0.00         1.18         -3.41 to -3.41  
      2014         491         39.91 to 39.91         19,602         0.00 to 0.00         0.82         10.70 to 4.90  

Money Market Trust Series I (*)

       2018         1,184         25.21 to 25.21         29,833         0.00 to 0.00         1.54         1.54 to 1.54  
      2017         1,046         24.83 to 24.83         25,942         0.00 to 0.00         0.58         0.59 to 0.59  
      2016         1,421         24.69 to 24.69         35,040         0.00 to 0.00         0.07         0.08 to 0.08  
      2015         1,474         24.66 to 24.66         36,327         0.00 to 0.00         0.00         0.00 to 0.00  
      2014         1,384         24.66 to 24.66         34,120         0.00 to 0.00         0.00         0.00 to 0.00  

Money-Market Trust Series NAV (*)

       2018         10,003         10.23 to 10.23         102,375         0.00 to 0.00         1.59         1.60 to 1.60  
      2017         9,104         10.07 to 10.07         91,727         0.00 to 0.00         0.63         0.61 to 0.42  
      2016         11,007         10.00 to 10.00         110,182         0.00 to 0.00         0.16         0.05 to 0.05  

PIMCO All Asset

       2018         1,851         24.40 to 17.29         32,594         0.00 to 0.00         2.93         -5.59 to -5.59  
      2017         1,614         25.85 to 18.31         30,167         0.00 to 0.00         4.49         13.19 to 6.12  
      2016         1,370         22.84 to 16.18         22,914         0.00 to 0.00         2.31         12.59 to 12.59  
      2015         1,439         20.28 to 14.37         21,371         0.00 to 0.00         3.01         -9.31 to -9.32  
      2014         1,461         22.37 to 15.84         24,126         0.00 to 0.00         4.55         0.24 to -3.88  

Real Estate Securities Trust Series I (*)

       2018         119         187.00 to 187.00         22,169         0.00 to 0.00         1.65         -3.46 to -3.46  
      2017         138         193.71 to 193.71         26,664         0.00 to 0.00         0.52         6.24 to 6.24  
      2016         152         182.34 to 182.34         27,761         0.00 to 0.00         3.34         6.92 to 6.92  
      2015         173         170.54 to 170.54         29,578         0.00 to 0.00         1.85         2.68 to 2.68  
      2014         191         166.10 to 166.10         31,721         0.00 to 0.00         1.63         31.73 to 31.73  

Real Estate Securities Trust Series NAV (*)

       2018         282         156.74 to 156.74         44,153         0.00 to 0.00         1.64         -3.43 to -3.43  
      2017         327         162.30 to 162.30         53,030         0.00 to 0.00         0.57         6.26 to 1.60  
      2016         347         152.74 to 152.74         53,069         0.00 to 0.00         3.56         6.96 to 6.96  
      2015         332         142.80 to 142.80         47,368         0.00 to 0.00         2.05         2.80 to 2.80  
      2014         283         138.91 to 138.91         39,373         0.00 to 0.00         1.81         31.75 to 13.03  

Science & Technology Trust Series I (*)

       2018         390         54.98 to 54.98         21,429         0.00 to 0.00         0.00         -0.61 to -0.61  
      2017         469         55.32 to 55.32         25,957         0.00 to 0.00         0.05         41.13 to 41.13  
      2016         431         39.20 to 39.20         16,892         0.00 to 0.00         0.00         8.39 to 8.39  
      2015         547         36.16 to 36.16         19,781         0.00 to 0.00         0.00         6.69 to 6.69  
      2014         557         33.90 to 33.90         18,893         0.00 to 0.00         0.00         12.89 to 12.89  

Science & Technology Trust Series NAV (*)

       2018         728         43.66 to 43.66         31,798         0.00 to 0.00         0.00         -0.57 to -0.57  
      2017         646         43.91 to 43.91         28,380         0.00 to 0.00         0.09         41.21 to 14.63  
      2016         631         31.10 to 31.10         19,631         0.00 to 0.00         0.00         8.41 to 8.41  
      2015         631         28.68 to 28.68         18,095         0.00 to 0.00         0.00         6.78 to 6.78  
      2014         486         26.86 to 26.86         13,046         0.00 to 0.00         0.00         14.24 to 12.95  

Select Bond Trust Series I (*)

       2018 (e)        258         11.90 to 11.90         3,069         0.00 to 0.00         2.64         -0.43 to -0.43  
      2017         301         11.95 to 11.95         3,592         0.00 to 0.00         2.82         3.67 to 3.67  
      2016         331         11.52 to 11.52         3,815         0.00 to 0.00         3.73         3.06 to 3.06  
      2015         73         11.18 to 11.18         818         0.00 to 0.00         3.03         0.24 to 0.24  
      2014         98         11.16 to 11.16         1,098         0.00 to 0.00         2.77         5.53 to 5.53  

Select Bond Trust Series NAV (*)

       2018 (f)        2,018         11.94 to 11.94         24,089         0.00 to 0.00         2.92         -0.38 to -0.38  
      2017         1,946         11.98 to 11.98         23,319         0.00 to 0.00         2.87         3.65 to 0.85  
      2016         1,730         11.56 to 11.56         19,996         0.00 to 0.00         3.66         3.19 to 3.19  
      2015         594         11.20 to 11.20         6,657         0.00 to 0.00         2.99         0.30 to 0.30  

 

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

7.

Unit Values — (continued)

 

        At December 31,   For the years and periods ended December 31,

Sub-account

   Year   Units
(000s)		   Unit Fair Value
Highest to Lowest(a)		   Assets
(000s)		   Expense Ratio
Highest to Lowest(b)		   Investment
Income Ratio(c)		   Total Return
Highest to Lowest(d)

Select Bond Trust Series NAV (*)

       2014         664       $ 11.17 to $11.17       $ 7,416         0.00 % to 0.00 %        2.80 %        5.59 % to 2.50 % 

Short Term Government Income Trust Series I (*)

       2018         487         10.90 to 10.90         5,315         0.00 to 0.00         1.98         0.84 to 0.84  
      2017         577         10.81 to 10.81         6,242         0.00 to 0.00         1.41         0.57 to 0.57  
      2016         541         10.75 to 10.75         5,814         0.00 to 0.00         1.69         0.57 to 0.57  
      2015         576         10.69 to 10.69         6,161         0.00 to 0.00         1.78         0.65 to 0.65  
      2014         592         10.62 to 10.62         6,284         0.00 to 0.00         1.82         1.15 to 1.15  

Short Term Government Income Trust Series NAV (*)

       2018         1,986         10.95 to 10.95         21,751         0.00 to 0.00         2.19         0.89 to 0.89  
      2017         1,796         10.86 to 10.86         19,499         0.00 to 0.00         1.48         0.62 to -0.20  
      2016         1,541         10.79 to 10.79         16,626         0.00 to 0.00         1.83         0.63 to 0.63  
      2015         1,256         10.72 to 10.72         13,465         0.00 to 0.00         1.87         0.69 to 0.69  
      2014         1,114         10.65 to 10.65         11,869         0.00 to 0.00         2.00         1.19 to 0.39  

Small Cap Index Trust Series I (*)

       2018         240         38.04 to 38.04         9,148         0.00 to 0.00         0.96         -11.42 to -11.42  
      2017         257         42.95 to 42.95         11,035         0.00 to 0.00         0.45         14.39 to 14.39  
      2016         256         37.55 to 37.55         9,614         0.00 to 0.00         1.15         20.98 to 20.98  
      2015         267         31.04 to 31.04         8,282         0.00 to 0.00         1.00         -4.58 to -4.58  
      2014         291         32.52 to 32.52         9,477         0.00 to 0.00         0.92         4.59 to 4.59  

Small Cap Index Trust Series NAV (*)

       2018         1,093         30.42 to 30.42         33,259         0.00 to 0.00         1.01         -11.31 to -11.31  
      2017         1,034         34.30 to 34.30         35,452         0.00 to 0.00         0.51         14.43 to 8.89  
      2016         956         29.98 to 29.98         28,653         0.00 to 0.00         1.27         21.02 to 21.02  
      2015         849         24.77 to 24.77         21,017         0.00 to 0.00         1.13         -4.59 to -4.59  
      2014         793         25.96 to 25.96         20,587         0.00 to 0.00         1.02         7.14 to 4.71  

Small Cap Opportunities Trust Series I (*)

       2018         600         42.79 to 42.79         25,669         0.00 to 0.00         0.42         -13.84 to -13.84  
      2017         677         49.66 to 49.66         33,643         0.00 to 0.00         0.41         11.07 to 11.07  
      2016         762         44.71 to 44.71         34,074         0.00 to 0.00         0.46         19.47 to 19.47  
      2015         818         37.42 to 37.42         30,614         0.00 to 0.00         0.07         -5.17 to -5.17  
      2014         903         39.46 to 39.46         35,643         0.00 to 0.00         0.05         2.39 to 2.39  

Small Cap Opportunities Trust Series NAV (*)

       2018         747         21.11 to 21.11         15,784         0.00 to 0.00         0.45         -13.81 to -13.81  
      2017         806         24.50 to 24.50         19,736         0.00 to 0.00         0.46         11.18 to 8.65  
      2016         797         22.03 to 22.03         17,570         0.00 to 0.00         0.53         19.51 to 19.51  
      2015         769         18.44 to 18.44         14,181         0.00 to 0.00         0.12         -5.12 to -5.12  
      2014         822         19.43 to 19.43         15,967         0.00 to 0.00         0.08         3.44 to 2.42  

Small Cap Stock Trust Series I (*)

       2018 (g)        64         30.90 to 30.90         1,990         0.00 to 0.00         0.00         -5.19 to -5.19  
      2017         74         32.59 to 32.59         2,426         0.00 to 0.00         0.00         26.46 to 26.46  
      2016         85         25.77 to 25.77         2,196         0.00 to 0.00         0.00         2.29 to 2.29  
      2015         103         25.19 to 25.19         2,583         0.00 to 0.00         0.00         -8.85 to -8.85  
      2014         94         27.64 to 27.64         2,586         0.00 to 0.00         0.00         7.57 to 7.57  

Small Cap Stock Trust Series NAV (*)

       2018 (h)        565         36.72 to 36.72         20,749         0.00 to 0.00         0.00         -5.22 to -5.22  
      2017         600         38.74 to 38.74         23,254         0.00 to 0.00         0.00         26.70 to 10.81  
      2016         565         30.58 to 30.58         17,276         0.00 to 0.00         0.00         2.27 to 2.27  
      2015         558         29.90 to 29.90         16,691         0.00 to 0.00         0.00         -8.78 to -8.78  
      2014         510         32.78 to 32.78         16,723         0.00 to 0.00         0.00         11.05 to 7.60  

Small Cap Value Trust Series I (*)

       2018         104         27.01 to 27.01         2,814         0.00 to 0.00         0.67         -12.50 to -12.50  
      2017         123         30.87 to 30.87         3,783         0.00 to 0.00         0.84         3.73 to 3.73  
      2016         177         29.76 to 29.76         5,266         0.00 to 0.00         0.68         22.67 to 22.67  
      2015         145         24.26 to 24.26         3,510         0.00 to 0.00         0.42         -1.36 to -1.36  
      2014         124         24.60 to 24.60         3,054         0.00 to 0.00         0.64         7.18 to 7.18  

Small Cap Value Trust Series NAV (*)

       2018         402         76.12 to 76.12         30,610         0.00 to 0.00         0.74         -12.45 to -12.45  
      2017         414         86.94 to 86.94         36,029         0.00 to 0.00         1.03         6.06 to 3.79  
      2016         406         83.77 to 83.77         34,010         0.00 to 0.00         0.79         22.68 to 22.68  
      2015         380         68.28 to 68.28         25,930         0.00 to 0.00         0.54         -1.31 to -1.31  
      2014         341         69.19 to 69.19         23,607         0.00 to 0.00         0.72         7.99 to 7.25  

Small Company Value Trust Series I (*)

       2018         277         41.56 to 41.56         11,494         0.00 to 0.00         0.37         -12.94 to -12.94  
      2017         302         47.74 to 47.74         14,425         0.00 to 0.00         0.22         11.49 to 11.49  
      2016         381         42.82 to 42.82         16,325         0.00 to 0.00         0.82         32.31 to 32.31  
      2015         364         32.36 to 32.36         11,775         0.00 to 0.00         1.30         -5.60 to -5.60  
      2014         401         34.28 to 34.28         13,756         0.00 to 0.00         0.03         0.11 to 0.11  

Small Company Value Trust Series NAV (*)

       2018         915         27.71 to 27.71         25,361         0.00 to 0.00         0.41         -12.93 to -12.93  
      2017         858         31.83 to 31.83         27,311         0.00 to 0.00         0.25         11.58 to 9.05  
      2016         844         28.53 to 28.53         24,090         0.00 to 0.00         0.87         32.33 to 32.33  
      2015         812         21.56 to 21.56         17,510         0.00 to 0.00         1.46         -5.51 to -5.51  
      2014         770         22.81 to 22.81         17,573         0.00 to 0.00         0.06         0.30 to 0.14  

Strategic Income Opportunities Trust Series I (*)

       2018         278         27.56 to 27.56         7,670         0.00 to 0.00         3.70         -5.03 to -5.03  
      2017         316         29.02 to 29.02         9,154         0.00 to 0.00         3.20         5.59 to 5.59  
      2016         307         27.48 to 27.48         8,445         0.00 to 0.00         2.36         5.12 to 5.12  
      2015         328         26.14 to 26.14         8,578         0.00 to 0.00         2.42         1.22 to 1.22  

 

70

Table of Contents

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

7.

Unit Values — (continued)

 

        At December 31,   For the years and periods ended December 31,

Sub-account

   Year   Units
(000s)		   Unit Fair Value
Highest to Lowest(a)		   Assets
(000s)		   Expense Ratio
Highest to Lowest(b)		   Investment
Income Ratio(c)		   Total Return
Highest to Lowest(d)

Strategic Income Opportunities Trust Series I (*)

       2014         354       $ 25.83 to $25.83       $ 9,149         0.00 % to 0.00 %        4.28 %        5.06 % to 5.06 % 
                           

Strategic Income Opportunities Trust Series NAV (*)

       2018         1,610         20.48 to 20.48         32,957         0.00 to 0.00         4.07         -5.00 to -5.00  
      2017         1,486         21.56 to 21.56         32,035         0.00 to 0.00         3.34         5.66 to 2.07  
      2016         1,317         20.40 to 20.40         26,859         0.00 to 0.00         2.48         5.19 to 5.19  
      2015         1,331         19.39 to 19.39         25,816         0.00 to 0.00         2.68         1.27 to 1.27  
      2014         1,258         19.15 to 19.15         24,083         0.00 to 0.00         4.69         5.13 to 1.57  
                           

Total Bond Market Series Trust NAV (*)

       2018         1,072         25.02 to 25.02         26,819         0.00 to 0.00         2.82         -0.24 to -0.24  
      2017         972         25.08 to 25.08         24,385         0.00 to 0.00         3.06         3.34 to 0.84  
      2016         804         24.27 to 24.27         19,505         0.00 to 0.00         2.76         2.45 to 2.45  
      2015         724         23.69 to 23.69         17,167         0.00 to 0.00         2.88         0.30 to 0.30  
      2014         681         23.62 to 23.62         16,086         0.00 to 0.00         3.42         6.06 to 2.90  
                           

Total Stock Market Index Trust Series I (*)

       2018         461         30.40 to 30.40         14,004         0.00 to 0.00         1.15         -5.70 to -5.70  
      2017         503         32.24 to 32.24         16,221         0.00 to 0.00         1.59         20.59 to 20.59  
      2016         250         26.73 to 26.73         6,683         0.00 to 0.00         1.49         12.38 to 12.38  
      2015         235         23.79 to 23.79         5,594         0.00 to 0.00         1.30         -0.64 to -0.64  
      2014         255         23.94 to 23.94         6,104         0.00 to 0.00         1.12         11.47 to 11.47  
                           

Total Stock Market Index Trust Series NAV (*)

       2018         570         101.44 to 101.44         57,849         0.00 to 0.00         1.25         -5.66 to -5.66  
      2017         570         107.52 to 107.52         61,254         0.00 to 0.00         1.49         20.65 to 9.95  
      2016         436         89.11 to 89.11         38,852         0.00 to 0.00         1.55         12.38 to 12.38  
      2015         387         79.30 to 79.30         30,669         0.00 to 0.00         1.49         -0.53 to -0.53  
      2014         306         79.72 to 79.72         24,387         0.00 to 0.00         1.29         11.46 to 8.79  
                           

Ultra Short Term Bond Trust Series I (*)

       2018         127         10.31 to 10.31         1,312         0.00 to 0.00         1.49         1.40 to 1.40  
      2017         177         10.17 to 10.17         1,798         0.00 to 0.00         1.60         0.66 to 0.66  
      2016         121         10.10 to 10.10         1,217         0.00 to 0.00         1.83         0.52 to 0.52  
      2015         84         10.05 to 10.05         848         0.00 to 0.00         1.36         -0.04 to -0.04  
      2014         62         10.05 to 10.05         620         0.00 to 0.00         1.61         -0.02 to -0.02  
                           

Ultra Short Term Bond Trust Series NAV (*)

       2018         649         10.36 to 10.36         6,727         0.00 to 0.00         1.94         1.53 to 1.53  
      2017         510         10.20 to 10.20         5,199         0.00 to 0.00         1.72         0.62 to 0.27  
      2016         386         10.14 to 10.14         3,917         0.00 to 0.00         1.57         0.67 to 0.67  
      2015         421         10.07 to 10.07         4,238         0.00 to 0.00         1.39         0.01 to 0.01  
      2014         338         10.07 to 10.07         3,409         0.00 to 0.00         1.61         0.03 to -0.14  
                           

Utilities Trust Series I (*)

       2018         89         41.01 to 41.01         3,646         0.00 to 0.00         3.30         0.88 to 0.88  
      2017         98         40.65 to 40.65         3,968         0.00 to 0.00         2.24         14.75 to 14.75  
      2016         99         35.43 to 35.43         3,492         0.00 to 0.00         5.01         11.35 to 11.35  
      2015         114         31.82 to 31.82         3,616         0.00 to 0.00         2.98         -14.76 to -14.76  
      2014         131         37.33 to 37.33         4,884         0.00 to 0.00         2.76         12.59 to 12.59  
                           

Utilities Trust Series NAV (*)

       2018         485         32.88 to 32.88         15,957         0.00 to 0.00         3.33         0.93 to 0.93  
      2017         526         32.57 to 32.57         17,122         0.00 to 0.00         2.46         14.82 to 3.40  
      2016         542         28.37 to 28.37         15,390         0.00 to 0.00         4.82         11.43 to 11.43  
      2015         525         25.46 to 25.46         13,376         0.00 to 0.00         3.21         -14.79 to -14.79  
      2014         504         29.88 to 29.88         15,058         0.00 to 0.00         3.22         12.72 to 2.31  

 

71

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

7.

Unit Values — (continued)

 

(*)

Sub-account that invests in affiliated Trust.

 

(a)

As the unit fair value is presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual contract unit values are not within the ranges presented.

 

(b)

These ratios represent the annualized contract expenses of the separate account, consisting primarily of the items known as “Revenue from underlying fund (12b-1, STA, Other)” and “Revenue from Sub-account” (formerly referred to as the administrative maintenance charges and sales and service fees (AMC and SSF)). The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to unitholder accounts through the redemption of units and expenses of the underlying fund are excluded.

 

(c)

These ratios represent the distributions from net investment income received by the sub-account from the underlying Portfolio, net of management fees assessed by the portfolio manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against policyholder accounts either through the reductions in the unit values or the redemptions of units. The recognition of investment income by the sub-account is affected by the timing of the declaration of dividends by the underlying Portfolio in which the sub-accounts invest.

 

(d)

These ratios, represent the total return for the periods indicated, including changes in the value of the underlying Portfolio, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options indicated in footnote 1 with a date notation, if any, denote the effective date of that investment option in the variable account. The total return is calculated for the period indicated or from the effective date through the end of the reporting period. For closed sub-accounts, the total return is calculated from the beginning of the reporting period to the date the sub-account closed. As the total return is presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual contract total returns are not within the ranges presented.

 

(e)

Renamed on April 30, 2018. Previously known as Bond Trust Series I.

 

(f)

Renamed on April 30, 2018. Previously known as Bond Trust Series NAV.

 

(g)

Renamed on April 30, 2018. Previously known as Small Cap Growth Trust Series I.

 

(h)

Renamed on April 30, 2018. Previously known as Small Cap Growth Trust Series NAV.

 

(i)

Sub-account available in prior year but no activity.

 

72

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JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT A

NOTES TO FINANCIAL STATEMENTS — (CONTINUED)

December 31, 2018

 

8.

Diversification Requirements

The Internal Revenue Service has issued regulations under Section 817(h) of the Internal Revenue Code (“the Code”). Under the provisions of Section 817(h) of the Code, a Contract will not be treated as a variable life contract for federal tax purposes for any period for which the investments of the Account on which the contract is based are not adequately diversified. The Code provides that the “adequately diversified” requirement may be met if the underlying investments satisfy either a statutory safe harbor test or diversification requirement set forth in regulations issued by the Secretary of the Treasury. The Company believes that the Account satisfies the current requirements of the regulations, and the Account will continue to meet such requirements.

 

9.

Contract Charges

The Company deducts certain charges from gross premiums before placing the remaining net premiums in the sub-account. In the event of a surrender by the contract holder, surrender charges may be levied by the Company against the contract value at the time of termination to cover sales and administrative expenses associated with underwriting and issuing the Contract. Additionally, each month a deduction consisting of an administrative charge, a charge for cost of insurance, and charges for supplementary benefits is deducted from the contract value. Contract charges are paid through the redemption of sub-accounts and are reflected as terminations.

 

73

Table of Contents
PART C
OTHER INFORMATION
Item 26. Exhibits
The following exhibits are filed as part of this Registration Statement:
(a) Resolution of Board of Directors establishing Separate Account A is incorporated by reference to post-effective amendment number 1, file number 333-157212, filed with the Commission in April 2010.
(b) Not applicable.
(c) (1) Distribution Agreement and Servicing Agreement between John Hancock Distributors and John Hancock Life Insurance Company (U.S.A.) dated February 17, 2009, incorporated by reference to pre-effective amendment number 1, file number 333-157212, filed with the Commission on April 7, 2009.
(2)(a) Specimen General Agent and Broker-Dealer Selling Agreement by and among John Hancock Life Insurance Company (U.S.A.) and John Hancock Distributors LLC effective August, 2009, incorporated by reference to pre-effective amendment number 2, file number 333-157212, filed with the Commission on April 26, 2011.
(b) List of third party broker-dealer firms included as Attachment A, incorporated by reference to post-effective amendment number 12, file number 333-179570, filed with the Commission on April 25, 2019.
(d)(1) Form of Specimen Flexible Premium Variable Life Insurance policy, filed herewith.
(2) Specimen Disability Payment of Specified Premium Rider, filed herewith.
(3) Acceleration of Death Benefit for Qualified Long-Term Care Services Rider, filed herewith.
(4) Specimen Cash Value Enhancement Rider, filed herewith.
(5) Specimen Overloan Protection Rider, filed herewith.
(6) Specimen Accelerated Benefit Rider, filed herewith.
(7) Specimen Return of Premium Rider, filed herewith.
(8) Specimen Healthy Engagement Rider, filed herewith.
(9) Specimen Critical Illness Benefit Rider, filed herewith.
(10) Specimen Acceleration of Death Benefit for Qualified Long-Term Care Services Rider, filed herewith.
(e) Specimen policy application, filed herewith.
(f) (1) Restated Articles of Redomestication of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated December 30, 1992, incorporated by reference to post-effective amendment number 9, file number 333-85284, filed with the Commission in April, 2007.
(a) Amendment to the Articles of Redomestication of John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated July 16, 2004, incorporated by reference to pre-effective amendment number 1, file number 333-126668, filed with the Commission on October 12, 2005.
(b) Amendment to the Articles of Redomestication effective January 1, 2005, incorporated by reference to post-effective amendment number 9, file number 333-85284, filed with the Commission in April, 2007.
(c) Amended and Restated Articles of Redomestication and Articles of Incorporation of John Hancock Life Insurance Company (U.S.A.) dated July 26, 2010, and further amended as of November 20, 2012, incorporated by reference to post-effective amendment number 1, file number 333-179570, filed with the Commission in April 2013.
(2) By-laws of John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated December 2, 1992, incorporated by reference to pre-effective amendment number 1, file number 333-126668, filed with the Commission on October 12, 2005.
(a) Amendment to the By-laws of John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated June 7, 2000, incorporated by reference to pre-effective amendment number 1, file number 333-126668, filed with the Commission on October 12, 2005.
(b) Amendment to the By-laws of John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated March 12, 1999, incorporated by reference to pre-effective amendment number 1, file number 333-126668, filed with the Commission on October 12, 2005.

 

(c) Amendment to the By-laws of John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated July 16, 2004, incorporated by reference to post-effective amendment number 9, file number 333-85284, filed with the Commission in April, 2007.
(d) Amended and Restated By-laws of John Hancock Life Insurance Company (U.S.A.) dated June 15, 2010, incorporated by reference to post-effective amendment number 1, file number 333-179570, filed with the Commission in April 2013.
(g) (1) Reinsurance Agreement between John Hancock Life Insurance Company of New York and Hanover Life Reassurance Company of America, incorporated by reference to post-effective amendment number 5, file number 333-179571, filed with the Commission on December 6, 2013.

(2) Reinsurance Agreement between John Hancock Life Insurance Company of New York and Generali USA Life Reassurance Company of America, incorporated by reference to post-effective amendment number 5, file number 333-179571, filed with the Commission on December 6, 2013.

(3) Reinsurance Agreement between John Hancock Life Insurance Company of New York and RGA Reinsurance Company, incorporated by reference to post-effective amendment number 5, file number 333-179571, filed with the Commission on December 6, 2013.

(4) Reinsurance Agreement between John Hancock Life Insurance Company of New York and Aurigen Reinsurance Company of America, incorporated by reference to post-effective amendment number 9, file number 333-17971, filed with the Commission on October 21, 2016.
(5) Reinsurance Agreement between John Hancock Life Insurance Company of New York and Hanover Life Reassurance Company of America, file number 333-17971, incorporated by reference to post-effective amendment number 9, filed with the Commission on October 21, 2016.
(6) Reinsurance Agreement between John Hancock Life Insurance Company of New York and RGA Reinsurance Company, file number 333-17971, incorporated by reference to post-effective amendment number 9, filed with the Commission on October 21, 2016.
(h) (1) Participation Agreement among the Manufacturers Insurance Company (U.S.A.), the Manufacturers Insurance Company of New York, PIMCO Variable Insurance Trust and PIMCO Advisors Distributors LLC dated April 30, 2004, incorporated by reference to pre-effective amendment number 1, file number 333-126668, filed with the Commission on October 12, 2005.
(2) Participation Agreement among John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, and John Hancock Trust dated April 20, 2005, incorporated by reference to pre-effective amendment number 1, file number 333-126668, filed with the Commission on October 12, 2005.
(3) Participation Agreement among John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, and M Financial Investment Advisers, Inc. dated November 13, 2009, incorporated by reference to file number 333-164150, filed with the Commission on January 4, 2010.
(4) Shareholder Information Agreement between John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance, and John Hancock Trust portfolios (except American Funds Insurance Series) dated April 16, 2007, incorporated by reference to post-effective amendment number 9, file number 333-85284, filed with the Commission in April, 2007.
(5) Shareholder Information Agreement between John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance, and John Hancock Trust on behalf of series of the Trust that are feeder funds of the American Funds Insurance Series dated April 16, 2007, incorporated by reference to post-effective amendment number 9, file number 333-85284, filed with the Commission in April, 2007.
(i) (1) Service agreement between Manulife Financial Corporation and the Manufacturers Life Insurance Company (U.S.A.), dated January 1, 2001, incorporated by reference to post-effective amendment number 6, file number 333-179570, filed with the Commission April 28, 2014.
(j) Not applicable.
(k) Opinion and consent of counsel for John Hancock Life Insurance Company (U.S.A.), filed herewith.
(l) Not Applicable.
(m) Not Applicable.
(n) Consent of Independent Registered Public Accounting Firm, filed herewith.

 

(n) (1) Opinion of Counsel as to the eligibility of this post-effective amendment to be filed pursuant to Rule 485(b), N/A.
(o) Not Applicable.
(p) Not Applicable.
(q) Memorandum Regarding Issuance, Face Amount Increase, Redemption and Transfer Procedures for the policies, incorporated by reference to pre-effective amendment number 1, file number 333-100597, filed with the Commission on December 16, 2002.
Powers of Attorney
(i) Powers of Attorney for Paul M. Connolly, James D. Gallagher, Marianne Harrison, J. Stephanie Nam, Ken Ross, Rex Schlaybaugh, Jr., Brooks Tingle, John G. Vrysen, Linda A. Davis Watters, and Henry H. Wong, filed herewith
Item 27. Directors and Officers of the Depositor
OFFICERS AND DIRECTORS OF JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
Name and Principal Business Address   Position with Depositor
Marianne Harrison

200 Berkeley Street

Boston, MA 02116
   Chair, President & Chief Executive Officer
Paul M. Connolly

75 Indian Spring Road

Milton, MA 02186
   Director
James D. Gallagher

200 Berkeley Street

Boston, MA 02116
   Director, Executive Vice President
J. Stephanie Nam

1 West 72nd Street, Apt. 35

New York NY 10023
   Director
Ken Ross

200 Berkeley St.

Boston, MA 02116
   Director
Rex Schlaybaugh, Jr.

400 Renaissance Center

Detroit, MI 48243
   Director
Brooks Tingle

200 Berkeley Street

Boston, MA 02116
   Director, Senior Vice President
John G. Vrysen

200 Berkeley Street

Boston, MA 02116
   Director
Linda A. Davis Watters

200 Berkeley Street

Boston, MA 02116
   Director
Henry H. Wong

200 Berkeley Street

Boston, MA 02116
   Director
Executive Vice Presidents
    
Andrew G. Arnott*
    
Christopher Paul Conkey**
    
Gregory Framke*
    
Gretchen Garrigues*
    
Scott S. Hartz**
   Chief Investment Officer – U.S. Investments
Naveed Irshad**
   Head of Legacy Business
Halina K. von dem Hagen***
   Treasurer
Shamus Weiland*
   Chief Information Officer
Senior Vice Presidents
    

 

Name and Principal Business Address   Position with Depositor
Emanuel Alves*
   General Counsel
John C.S. Anderson**
    
Michael Biagiotti*
    
Kevin J. Cloherty**
    
Peter DeFrancesco*
   Head of Digital – Direct to Consumer
Barbara Goose*
   Chief Marketing Officer
Linda Levyne*
    
Patrick McGuinness*
    
William McPadden**
    
Joelle Metzman**
    
Patrick M. Murphy*
    
Lee Ann Murray**
    
Sebastian Pariath*
   Head of Operations and Chief Information Officer
Martin Sheerin*
   Chief Financial Officer
Curt Smith*
    
Anthony Teta*
    
Leo Zerilli**
    
Vice Presidents
    
Lynda Abend*
    
John Addeo**
    
Kevin Askew**
    
Dwayne Bertrand**
    
Zahir Bhanji***
   CFO JH Insurance
Stephen J. Blewitt**
    
Alan M. Block**
    
John Bourgault**
   Senior Counsel
Paul Boyne**
    
Ian B. Brodie**
    
Ted Bruntrager*
   Chief Risk Officer
Grant Buchanan***
    
Daniel C. Budde**
    
Robert Burrow**
    
Jennifer Toone Campanella**
    
Thomas Carlisle**
    
Rick A. Carlson*
    
Patricia Rosch Carrington**
    
Todd J. Cassler*
    
Ken K. Cha*
    
Diana Chan***
   Treasury Operations
Brian Collins*
    
Marcelle Dahar*
    
Kenneth D’Amato*
    
John J. Danello**
    
Andreas Deutschmann*
    
Robert Donahue*
    
Jeffrey Duckworth*
    
Carolyn Flanagan**
    
Lauren Marx Fleming**
    
Philip J. Fontana**
    
Carl O. Fowler**
    
Scott Francolini*
    
Paul Gallagher**
    
Thomas C. Goggins**
    
Susan Ghalili*
    
Jeffrey N. Given**
    
Howard C. Greene**
    
Christopher Griswold*
    

 

Name and Principal Business Address   Position with Depositor
Richard Harris***
   Appointed Actuary
Ellie Harrison*
   US Human Resources
John Hatch*
    
Michael Hession*
    
Kevin Hill*
    
James C. Hoodlet*
    
Steven Hutcheon**
    
Daniel S. Janis III**
    
Mitchell Karman**
   CCO & Counsel
Recep C. Kendircioglu**
    
Neal P. Kerins*
    
Frank Knox**
   CCO – Retail Funds
Hung Ko***
   Treasury
Diane R. Landers**
    
Scott Lively**
    
Jeffrey H. Long**
    
Jennifer Lundmark*
    
Patrick MacDonnell**
    
Nathaniel I. Margolis**
    
Robert G. Maulden**
    
John B. Maynard**
    
Karen McCafferty**
    
Scott A. McFetridge**
    
Jonathan McGee**
    
Ann McNally*
    
Michael McNamara*
    
Steven E. Medina**
    
Maureen Milet**
   CCO – Investments
Scott Morin*
    
Jeffrey H. Nataupsky**
    
Scott Navin**
    
Sinead O’Connor*
    
Jeffrey Packard**
    
Gary M. Pelletier**
    
David Pemstein**
    
Charlie Philbrook*
    
David Plumb*
    
Tracey Polsgrove*
    
Charles A. Rizzo**
    
Robert William Rizzo*
    
Susan Roberts*
    
Keri Rogers**
    
Ian Roke**
    
Josephine M. Rollka*
    
Ken Ross*
    
Ronald J. Rovner*
    
Devon Russell*
    
Lisa Anne Ryan*
    
Thomas Samoluk**
    
Emory W. Sanders*
    
Jeffrey R. Santerre**
    
Martin C. Schafer*
    
Christopher L. Sechler**
    
Thomas Shea**
    
Gordon Shone**
    
Susan Simi**
    
Darren Smith**
    

 

Name and Principal Business Address   Position with Depositor
Rob Stanley*
    
Paddy Subbaraman**
    
Wilfred Talbot*
    
Gary Tankersley*
    
Nathan Thooft**
    
Tony Todisco*
    
Brian E. Torrisi**
    
Len van Greuning*
    
Simonetta Vendittelli*
   Controller
Peter de Vries*
    
Lisa Ann Welch**
    
Adam Wise**
    
R. Blake Witherington**
    
Sameh Youssef*
    
Ross Zilber*
    
*Principal Business Office is 200 Berkeley Street, Boston, MA 02116
**Principal Business Office is 197 Clarendon Street, Boston, MA 02116
***Principal Business Office is 200 Bloor Street, Toronto, Canada M4W1E5
****Principal Business Office is 250 Bloor Street, Toronto, Canada M4W1E5
Item 28. Persons Controlled by or Under Common Control with the Depositor or the Registrant
The Registrant is a separate account of the Depositor operating as a unit investment trust. The Registrant supports benefits payable under the Depositor's variable life insurance policies by investing assets allocated to various investment options in shares of John Hancock Variable Insurance Trust (formerly, John Hancock Trust) and other mutual funds registered under the Investment Company Act of 1940 as open-end management investment companies of the “series” type.
As of the effective date of the registration statement, the Company and its affiliates are controlled by Manulife Financial Corporation.

 

 

Item 29. Indemnification
The Form of Selling Agreement or Service Agreement between John Hancock Distributors LLC (“JH Distributors”) and various broker-dealers may provide that the selling broker-dealer indemnify and hold harmless JH Distributors and the Company, including their affiliates, officers, directors, employees and agents against losses, claims, liabilities or expenses (including reasonable attorney’s fees), arising out of or based upon a breach of the Selling or Service Agreement, or any applicable law or regulation or any applicable rule of any self-regulatory organization or similar provision consistent with industry practice.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 30. Principal Underwriter
(a) Set forth below is information concerning other investment companies for which JH Distributors, the principal underwriter of the contracts, acts as investment adviser or principal underwriter.
Name of Investment Company   Capacity in Which Acting
John Hancock Variable Life Account S
   Principal Underwriter
John Hancock Variable Life Account U
   Principal Underwriter
John Hancock Variable Life Account V
   Principal Underwriter
John Hancock Variable Life Account UV
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account R
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account T
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account W
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account X
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account Q
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account A
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account N
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account H
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account I
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account J
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account K
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account L
   Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account M
   Principal Underwriter
John Hancock Life Insurance Company of New York Separate Account B
   Principal Underwriter
John Hancock Life Insurance Company of New York Separate Account A
   Principal Underwriter

 

(b) John Hancock Life Insurance Company (U.S.A.) is the sole member of JH Distributors and the following comprise the Board of Managers and Officers of JH Distributors.
Name   Title
James C. Hoodlet*
   Director
Gary Tankersley*
   Director, President and Chief Executive Officer
Martin Sheerin*
   Director
Christopher Walker***
   Director, Vice President, Investments
Tracy Lannigan**
   Secretary
Brian Collins**
   Vice President, US Taxation
Jeffrey H. Long**
   Chief Financial Officer and Financial Operations Principal
*Principal Business Office is 200 Berkeley Street, Boston, MA 02116
**Principal Business Office is 197 Clarendon Street, Boston, MA 02116
***Principal Business Office is 200 Bloor Street, Toronto, Canada M4W1E5
(c) John Hancock Distributors LLC
Compensation received, directly or indirectly, from the Registrant by John Hancock Distributors LLC, the sole principal underwriter of the contracts funded by the Separate Account during the last fiscal year:
(1)   (2)   (3)   (4)   (5)
Name of
Principal
Underwriter 		  Net
Underwriting
Discounts and
Commissions 		  Compensation
on Events
Occasioning
the Deduction
of a Deferred
Sales Load 		  Brokerage
Commissions 		  Other
Compensation
John Hancock Distributors LLC   $0   $0   $0   $0
Item 31. Location of Accounts and Records
The following entities prepare, maintain, and preserve the records required by Section 31(a) of the Act for the Registrant through written agreements between the parties to the effect that such services will be provided to the Registrant for such periods prescribed by the Rules and Regulations of the Commission under the Act and such records will be surrendered promptly on request: John Hancock Distributors LLC, 200 Berkeley Street, Boston, Massachusetts 02116, serves as Registrant’s distributor and principal underwriter, and, in such capacities, keeps records regarding shareholders account records, cancelled stock certificates. John Hancock Life Insurance Company (U.S.A.) (at the same address), in its capacity as Registrant’s depositor keeps all other records required by Section 31 (a) of the Act.
Item 32. Management Services
All management services contracts are discussed in Part A or Part B.
Item 33. Fee Representation
Representation of Insurer Pursuant to Section 26 of the Investment Company Act of 1940
John Hancock Life Insurance Company (U.S.A.) hereby represents that the fees and charges deducted under the contracts issued pursuant to this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Company.

 

Signatures
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this pre-effective amendment to the Registration Statement to be signed on its behalf in the City of Boston, Commonwealth of Massachusetts, as of the 16th day of December, 2019.
John Hancock Life Insurance Company (U.S.A.) Separate Account A
(Registrant)
By: JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
By: /s/ Marianne Harrison
Marianne Harrison
Principal Executive Officer
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
(Depositor)
By: /s/ Marianne Harrison
Marianne Harrison
Principal Executive Officer

 

Signatures
Pursuant to the requirements of the Securities Act of 1933, this pre-effective amendment to the Registration Statement has been signed by the following persons in the capacities indicated as of the 16th day of December, 2019.
Signatures Title
/s/ Simonetta Vendittelli
Simonetta Vendittelli 		Vice President and Controller
/s/ Martin Sheerin
Martin Sheerin 		Senior Vice President and Chief Financial Officer
*
Marianne Harrison 		Chair, President and Chief Executive Officer
*
Paul M. Connolly 		Director
*
James D. Gallagher 		Director
*
J. Stephanie Nam 		Director
*
Ken Ross 		Director
*
Rex Schlaybaugh, Jr. 		Director
*
Brooks Tingle 		Director
*
John G. Vrysen 		Director
*
Linda A. Davis Watters 		Director
*
Henry H. Wong 		Director
/s/James C. Hoodlet
James C. Hoodlet 		 
*Pursuant to Power of Attorney