C$ unless otherwise stated
TSX/NYSE/PSE: MFC
SEHK: 945

Strategic and operating highlights in 2015:

• Asia – Delivered a 28% increase in insurance sales and a 56% increase in wealth and asset management gross flows; entered into a flagship 15-year bancassurance partnership with DBS Bank Ltd. ("DBS"), providing exclusive distribution rights in Singapore, Hong Kong, Indonesia and mainland China; announced an agreement to acquire Standard Chartered Bank's existing pension business in Hong Kong and to become its exclusive Mandatory Provident Fund ("MPF") distribution partner for a 15-year period; launched ManulifeMOVE in Hong Kong and Macau, a wellness initiative that rewards customers for active living; and successfully launched a digital sales channel in mainland China.
• Canada – Achieved record gross flows and an 8% increase in retail insurance sales; completed the acquisition of the Canadian-based operations of Standard Life plc ("Standard Life") and made significant progress on the integration; launched DrugWatch, an innovative solution designed to ensure Group Benefits clients get value for money on higher cost drugs; enhanced our customer experience by using voice biometrics to allow customers to use their voice as their password; and added more than 800 Manulife Bank automated banking machines across Canada.
• U.S. – Delivered a 14% increase in mutual fund gross flows and strong sales from the acquired pension business; completed the Retirement Plan Services acquisition and reinsurance agreement with New York Life; entered the exchange traded fund ("ETF") market with the launch of six ETFs; launched a UCITS¹ platform, to expand John Hancock Investments' reach to non-U.S. domiciled retail investors; and launched an exclusive U.S. life insurance partnership with Vitality, the global leader in integrating wellness benefits with life insurance products.
• Global Wealth and Asset Management – Surpassed $500 billion in assets under management and administration for our wealth and asset management businesses; delivered strong investment performance at Manulife Asset Management ("MAM"), with the majority of public asset classes outperforming their benchmarks on a 1-, 3- and 5- year basis; MAM launched a UCITS fund structure to support our institutional asset management expansion into the European market; expanded liability-driven investing capabilities significantly with the successful integration of the Standard Life acquisition.

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1 Undertakings for Collective Investment in Transferable Securities.}

TORONTO, Feb.11, 2016 /CNW/ - Manulife Financial Corporation ("MFC") today announced net income attributed to shareholders of $246 million for the fourth quarter of 2015 ("4Q15") and $2,191 million for the full year of 2015. This compares to $640 million and $3,501 million for the corresponding periods in 2014. In 4Q15, fully diluted earnings per common share ("EPS") was $0.11 and return on common shareholders' equity ("ROE") was 2.3% compared with $0.33 and 8.1%, respectively, for the fourth quarter of 2014 ("4Q14"). For the full year of 2015, fully diluted EPS was $1.05 and ROE was 5.8%, compared with $1.80 and 11.9%, respectively in 2014.   

Net income attributed to shareholders for the quarter and full year was significantly impacted ($250 million of charges in 4Q15 and $876 million in charges for the full year of 2015) by the sharp decline in oil and gas prices on our investment-related experience.  

Core earnings² (consisting of items we believe reflect the underlying earnings capacity of the business) in 4Q15 were $859 million compared with $713 million in 4Q14 and for the full year 2015 were $3,428 million compared with $2,888 million in 2014. In 4Q15, fully diluted core earnings per common share ("Core EPS")² was $0.42 and core return on common shareholders' equity ("Core ROE")² was 8.7% compared with $0.30 and 9.2%, respectively, in 4Q14. For the full year of 2015, Core EPS was $1.68 and Core ROE was 9.2%, compared with $1.48 and 9.8%, respectively, in 2014.

Donald Guloien, President and Chief Executive Officer, stated, "This was a disappointing year in terms of net income, largely due to sharp mark-to-market declines in oil and gas prices, diminishing an otherwise great year. Our core earnings, before giving effect to investment-related impacts, rose 28%, which was ahead of plan, and highlights Manulife's powerful operating momentum. We delivered strong top line growth both in the fourth quarter and for the full year, with most of it coming from businesses which generate our highest returns." 

"Looking ahead, we expect that some macroeconomic headwinds and energy price volatility will persist, and that unless energy prices strengthen, it will be difficult for us to achieve the $4 billion core earnings objective we have set for 2016.³ Despite these challenges, we have never felt more confident about the underlying fundamentals and the long-term strategic positioning of our company. On this basis, we again raised our dividend today, marking our third increase in less than two years. This decision reflects our Board's confidence in our capital position, our ability to deliver sustainable underlying core earnings growth, and the significant progress we have made on our strategic plan," added Mr. Guloien.

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2 This item is a non-GAAP measure. See "Performance and Non-GAAP Measures" below.
3 See "Caution regarding forward-looking statements" below.}

Steve Roder, Chief Financial Officer, said, "Return on equity for the year was below our expectations; however, we expect Core ROE expansion over the medium term as we execute on our strategy and as investment experience normalizes."

"Our underlying business results in 2015 demonstrate that we are on the right path. We generated strong net flows into our global wealth and asset management businesses, we substantially grew insurance sales, margins and new business value in Asia, and we delivered core earnings per share growth of over 20% before giving effect to investment-related impacts," added Mr. Roder.

Financial highlights for 4Q15 and full year 2015:

• Reported net income attributed to shareholders of $246 million in 4Q15, down $394 million from 4Q14, and $2,191 million in 2015, down $1,310 million from 2014:
  • In 4Q15, net income attributed to shareholders included core earnings of $859 million and net charges for items excluded from core earnings of $613 million. The items excluded from core earnings include a $361 million charge for investment-related experience, primarily due to the impact of sharply lower oil and gas prices on our investment portfolio, along with a number of smaller items totaling $252 million. These items included the impact of actuarial model refinements, integration costs, and the direct impact of equity markets and interest rates. 
  • In 2015, net income attributed to shareholders included core earnings of $3,428 million and net charges for items excluded from core earnings of $1,237 million. The items excluded from core earnings include a $530 million charge for investment-related experience, primarily due to the impact of sharply lower oil and gas prices on our investment portfolio, the impact of changes in actuarial methods and assumptions, integration and acquisition costs, and the direct impact of equity markets and interest rates.
• Generated core earnings of $859 million in 4Q15, up $146 million from 4Q14, and $3,428 million in 2015, up $540 million from 2014.
  • The $146 million or 20% increase in core earnings for 4Q15 included $52 million related to recent acquisitions, the impact of new business growth and higher product margins, particularly in Asia, higher fee income from our Wealth and Asset Management ("WAM")  businesses reflecting higher asset levels, and a $94 million positive impact of foreign exchange rates. The increase was partially offset by the inclusion of $50 million of core investment gains in 4Q14 core earnings while 4Q15 core earnings had no core investment gains. Core earnings in 4Q15 included a policyholder experience charge of $50 million driven by adverse policyholder experience in the U.S., partially offset by favourable policyholder experience in Asia and Canada. 
  • The $540 million increase in core earnings for 2015 included $155 million related to recent acquisitions, the impact of new business growth and $325 million related to changes in foreign exchange rates, partially offset by the inclusion of $200 million of core investment gains in 2014 core earnings while 2015 core earnings included none. On a divisional basis, Asia core earnings increased by 18% after adjusting for the impact of currency rates reflecting strong growth in new business volumes combined with higher product margins and favourable product mix and policyholder experience. Core earnings in Canada increased by 36%, of which approximately half was related to the recent acquisition. U.S. core earnings declined 4% after adjusting for the impact of currency rates, reflecting unfavourable policyholder experience and lower tax benefits, partially offset by higher WAM fee income from higher asset levels. In 2015, unfavourable policyholder experience netted to a charge of $205 million, with unfavourable policyholder experience in the U.S. and Canada partially offset by favourable policyholder experience in Asia. 
• Reported investment-related experience charges of $361 million in 4Q15 and $530 million in 2015. The investment-related experience charges were driven by fair value adjustments to our oil and gas investments, which amounted to $250 million in 4Q15 and $876 million in 2015. In addition, updates to cash flows used in actuarial modelling and future tax impacts also contributed to investment-related experience charges in 4Q15.
• Achieved insurance sales ⁴ of $1,027 million in 4Q15, an increase of 22%⁵ compared with 4Q14, and $3.4 billion in 2015, up 24% from 2014.
  • In 4Q15, the strong growth in insurance sales was driven by solid double digit growth in Asia and large-case group benefit sales in Canada. In Asia, insurance sales increased 20%, driven by double digit growth in most territories. Canadian insurance sales increased 76%, driven by normal variability in large-case group benefits sales. U.S. insurance sales decreased 17% due to competitive pressures in the life insurance market and lower Long-Term Care sales.
  • In 2015, the strong growth in insurance sales was driven by Asia, which grew 28%, and normal variability in large-case group benefit sales in Canada. In Asia, we achieved our 3rd consecutive year of record insurance sales, reflecting the success of product and marketing initiatives and expansion of our distribution channels. In Canada, sales also benefited from strong retails sales. In the U.S., insurance sales decreased 3% as an increase in life insurance sales was more than offset by lower Long-Term Care sales.   
• Generated net flows⁴ of $8.7 billion and $34.4 billion in our wealth and asset management businesses in 4Q15 and 2015, respectively, an increase of $5.9 billion and canadian$16.1 billion from 4Q14 and 2014, respectively.
  • 4Q15 marked the 24th consecutive quarter of positive net flows into our wealth and asset management businesses. Driving the strong net flows were robust gross flows⁴ of $31.1 billion, up 53%⁵ from 4Q14 (up 29% excluding recently acquired businesses), and solid retention. Gross flows in Asia increased 7% compared with the prior year period due to strong growth in mutual fund sales in mainland China and continued strong pension sales in Hong Kong. In Canada, gross flows increased 45% driven by strong mutual fund gross flows and the impact of the recent acquisition (up 5% excluding the recent acquisition). U.S. gross flows increased 50% (up 21% excluding the recent acquisition), driven by a record quarter in pensions and continued strong mutual fund gross flows. Manulife Asset Management ("MAM") gross flows more than doubled driven by significant fixed income mandates in Japan and South Korea.
  • In 2015, driving the strong net flows were robust gross flows of $114.7 billion, up 46% from 2014 (up 32% excluding recently acquired businesses), and solid retention. Asia gross flows increased 56% compared with the prior year due to strong growth in mutual fund sales in mainland China and continued strong pension sales in Hong Kong. In Canada, gross flows increased 57% driven by strong pension and mutual fund gross flows and the impact of the recent acquisition (up 22% excluding the recent acquisition). U.S. gross flows increased 26%, driven by strong mutual fund gross flows and the recent acquisition of New York Life's pension business (up 10% excluding the recent acquisition). MAM gross flows more than doubled driven by significant fixed income mandates.
• Delivered Other Wealth sales⁶ of $2.1 billion in 4Q15, an increase of 80% compared with 4Q14, and $7.5 billion in 2015, up 89% from 2014.
  • In 4Q15, Other Wealth sales in Asia almost doubled driven by expanded distribution and recent product launches in Japan, while Canada benefited from contributions from the recent acquisition.⁷
  • In 2015, Other Wealth sales increased 89% as sales in Japan nearly tripled due to enhanced distribution and the success of new products, and Canada benefited from contributions from the recent acquisition.
• Generated New Business Value⁶ of $296 million in 4Q15, up 33% from 4Q14, and $1,025 million in 2015, up 35% from 2014. The growth in new business value largely reflects strong sales in Asia and Canada and higher product margins in Asia, partly offset by lower volumes and unfavourable mix in the U.S.
• Achieved assets under management and administration⁶ ("AUMA") of $935 billion at December 31, 2015, an increase of $244 billion compared with 2014. The increase included $118 billion from recent acquisitions, net of the Closed Block reinsurance transaction.  Wealth and asset management AUMA increased $196 billion from December 31, 2014 to $511 billion, driven by strong net inflows and contributions of $109 billion from recent acquisitions.
• Reported a Minimum Continuing Capital and Surplus Requirements ("MCCSR") ratio of 223% for The Manufacturers Life Insurance Company ("MLI") as at December 31, 2015 compared with 226% as at September 30, 2015. The decline in the quarter was driven by the recapture of a reinsurance treaty and growth in required capital that outpaced earnings, partially offset by the issuance of $1 billion of subordinated debt.
• Reported a financial leverage ratio for MFC of 23.8% at December 31, 2015 compared with 22.7% as at September 30, 2015, reflecting MLI's issuance of $1 billion of subordinated debt, partially offset by the impact of the strengthening U.S. dollar compared with the Canadian dollar. The ratio was 27.8% at December 31, 2014, and the improvement over the year reflected the strengthening of the U.S. dollar, the conversion of subscription receipts into common equity following the closing of the Standard Life acquisition, and an increase in retained earnings.
• Delivered $2.2 billion in remittances⁸ from operating divisions to the Group in 2015, compared with $2.4 billion in 2014.
• Achieved approximately $350 million in net pre-tax Efficiency and Effectiveness ("E&E") savings in 2015 − above our previously communicated $300 million estimate. We are on track to exceed $400 million in net pre-tax savings in 2016⁹ and continue to reinvest a portion of the savings into other strategic initiatives to sustain our long-term earnings growth.

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^{4  This item is a Non-GAAP measure. See "Performance and Non-GAAP Measures" below. The Company introduced new wealth and asset management disclosure at its May 11, 2015 Investor Day. For further information, please see the Investor Day press release.
5   Growth (declines) in sales, gross flows and assets under management and administration are stated on a constant currency basis. Constant currency basis is a Non-GAAP measure. See "Performance and Non-GAAP Measures" below. 
6  This item is a non-GAAP measure. See "Performance and Non-GAAP Measures" below. The Company introduced enhanced embedded value disclosure at its May 11, 2015 Investor Day. For further information, please see the Investor Day press release.
7   The U.S. division does not have any products for sale in this category.
8   Remittances are defined as cash remitted by operating subsidiaries and excess capital generated by stand-alone Canadian operations, and available for deployment by Manulife.
9 See "Caution regarding forward-looking statements" below.}

Financial Highlights

SALES AND BUSINESS GROWTH

Asia Division
Roy Gori, Senior Executive Vice President and General Manager, Asia Division stated, "We delivered continued strong growth in core earnings and new business value in 2015, achieving core earnings above US$1 billion for the first time. This was driven by a clear focus on meeting the wealth and insurance needs of our customers across Asia, continuing to innovate across product delivery and customer engagement and extending our distribution reach.  

"We have completed preparations to launch our exclusive distribution partnership with DBS in Singapore, Hong Kong, Indonesia and mainland China, providing access to 6 million customers.  We activated a 10-year partnership with Saigon Commercial Bank in Vietnam and agreed to become Standard Chartered Bank's exclusive Mandatory Provident Fund provider in Hong Kong for 15 years, alongside the acquisition of its existing pension business.  In addition, we closed the year with a record number of sales agents."

Mr. Gori added, "Our focus on customer engagement was rewarded by the success of ManulifeMOVE, our wellness initiative, in Hong Kong and Macau, the first steps in our planned regional roll-out. In addition, we launched a digital sales channel in mainland China to drive customer acquisition and provide an interactive digital experience."

Insurance sales of US$416 million in 4Q15 were 20% higher than 4Q14, with double digit growth in most territories and record sales in Hong Kong and Asia Other. Full year sales of US$1.5 billion were 28% higher than 2014. (Percentages quoted below are for the period 4Q15 compared with 4Q14, and full year 2015 compared with 2014, unless stated otherwise.)

• Japan insurance sales in 4Q15 were US$148 million, an 11% increase reflecting the continued success of corporate products, new product initiatives and the ongoing expansion of our distribution reach. Full year 2015 insurance sales of US$640 million increased 24%.
• Hong Kong insurance sales in 4Q15 were US$127 million, a 29% increase driven by successful sales campaigns, the continued benefit from the launch of ManulifeMOVE in 3Q15 and growing momentum from recent product launches. Full year 2015 insurance sales of US$378 million increased 29%.
• Indonesia insurance sales in 4Q15 were US$26 million, a 13% decrease reflecting the challenging economic environment. Full year 2015 insurance sales of US$97 million decreased 4%.
• Asia Other (excludes Japan, Hong Kong and Indonesia) insurance sales in 4Q15 were US$115 million, a 35% increase driven by continued strong growth in most geographic markets, underpinned by a number of successful product launches. Singapore and Vietnam experienced significant growth of 66% and 64%, respectively. Full year 2015 insurance sales of US$392 million increased 46%.

Other Wealth sales of US$929 million in 4Q15 were 93% higher compared with 4Q14. Full year sales of US$3.0 billion more than doubled compared with 2014. Other Wealth sales growth was mainly driven by the success of recent product initiatives and expansion of the bank distribution channel in Japan.

Wealth and Asset Management ("WAM") gross flows of US$2.5 billion in 4Q15 were 7% higher than 4Q14. Full year gross flows of US$12.2 billion were 56% higher than 2014. (Percentages quoted below are for the period 4Q15 compared with 4Q14, and full year 2015 compared with 2014, unless stated otherwise.)

• Japan gross flows in 4Q15 of US$27 million decreased 82% as volatile equity markets impacted consumer demand. Full year 2015 WAM gross flows of US$369 million decreased 41%.
• Hong Kong gross flows in 4Q15 of US$660 million increased 17%, driven by the continued growth of our pension business and new fund launches. Full year 2015 WAM gross flows of US$2.6 billion increased 21%.
• Indonesia gross flows in 4Q15 of US$108 million decreased 54%, driven by lower mutual fund sales as a result of unfavourable market sentiment. Full year 2015 WAM gross flows of US$564 million decreased 22%.
• Asia Other gross flows of US$1.7 billion increased 22%. The increase reflected growing customer demand for wealth management solutions in mainland China. Full year 2015 WAM gross flows of US$8.7 billion increased 101%.

Canadian Division 
Marianne Harrison, Senior Executive Vice President and General Manager, Canadian Division stated, "In 2015, we completed the acquisition of Standard Life, welcoming 1.4 million customers and 2,000 talented employees. We have made significant progress integrating the two companies; having successfully completed the conversion of the Standard Life mutual fund customers and initiated the conversion of the Group clients. Additionally, we delivered record Group Retirement Solutions sales and record mutual fund gross flows, despite the volatility in equity markets this year."

Ms. Harrison added, "In 2015, we introduced a number of customer-facing initiatives, including: voice biometrics as well as natural language understanding in a single interactive voice response system; we launched the DrugWatch program; we launched Manulife Quick Issue Term life insurance; and we rolled out over 800 Manulife Bank-branded automated banking machines across Canada. In the fourth quarter, we officially opened a Manulife Private Wealth office in Hong Kong to serve high net worth customers, especially those from Hong Kong and mainland China, who have made arrangements to emigrate to Canada."

Wealth and Asset Management gross flows in 4Q15 were $3.9 billion (including $1.1 billion from acquired business), compared with $2.7 billion in 4Q14. Full year gross flows were $16.5 billion (including $3.6 billion from acquired business), an increase of $6.0 billion, or 57%, compared with 2014, reflecting growth in mutual fund gross flows and large-case sales in Group Retirement Solutions.

• Mutual Funds assets under management¹⁰ and other funds assets under management were a record $44.9 billion at December 31, 2015, compared with $33.4 billion at December 31, 2014. Gross flows of $2.1 billion in 4Q15 increased $0.6 billion or 36% (including $0.3 billion from acquired business) compared with 4Q14. Full year gross flows were $8.8 billion (including $0.9 billion from acquired business), an increase of $2.5 billion or 40%. The increase in assets under management reflects $6.7 billion from the recent acquisition, coupled with net flows and positive market performance.¹¹
• Group Retirement Solutions gross flows of $1.8 billion in 4Q15 (including $0.9 billion from acquired business) were $0.7 billion or 59% higher than 4Q14. Full year gross flows were $7.8 billion in 2015 (including $2.7 billion from acquired business), an increase of $3.6 billion or 84% over 2014.

Other Wealth sales in 4Q15 were $868 million and increased 64% compared with 4Q14 (9% decrease excluding acquired business). Full year 2015 Other Wealth sales were $3.6 billion, up 76% over 2014 (4% increase excluding acquired business).

• Segregated Fund Products¹² sales were $712 million in 4Q15, an increase of 78% from 4Q14 (2% increase excluding acquired business) and $3.0 billion for the full year 2015, an increase of 90% compared with 2014 (15% increase excluding acquired business).
• Fixed Products sales were $652 million for the full year 2015, an increase of 33% from 2014 (34% decrease excluding acquired business). Our deliberate rate positioning continued to constrain fixed product sales in the current low interest rate environment.

Manulife Bank net lending assets were $19.4 billion as at December 31, 2015, in line with prior year levels, as growth continued to be impacted by intense competition in the residential mortgage market and the impact of economic uncertainty. 

Insurance sales of $303 million in 4Q15 increased 76% compared with 4Q14, reflecting large-case sales in Group Benefits. Full year 2015 insurance sales of $825 million increased 43% compared with 2014, also reflecting large case sales in Group Benefits as well as strong Retail Insurance sales.

• Retail Insurance sales of $49 million in 4Q15 were in line with 4Q14 levels. Full year retail insurance sales were $181 million in 2015, an 8% increase compared with 2014. The increase was driven by product launches and enhancements to our universal life, term and living benefits products.
• Institutional Markets sales of $254 million in 4Q15 increased 107% and full year 2015 sales of $644 million increased 57%, respectively, compared with the corresponding period in 2014, driven by large-case activity in Group Benefits.

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^{10   This item is a non-GAAP measure.  See "Performance and Non-GAAP Measures" below.
11 Mutual fund assets under management and gross flows as reported here include investments in mutual funds from proprietary segregated fund products.
12 Segregated fund products include guarantees. These products are also referred to as variable annuities.}

U.S. Division  
Craig Bromley, Senior Executive Vice President and General Manager, U.S. Division stated, "Our Wealth and Asset Management businesses reported record annual gross flows driven by contributions from the acquired pension business and the sixth consecutive year of record gross flows and robust net flows in John Hancock Investments.  These very strong results were driven by good investment performance across most asset classes and a strong product line-up, including 36 Four- or Five- Star Morning Star rated mutual funds.¹³ Our newly launched Exchange Traded Funds and offshore businesses have positioned us to expand our investor base in the future. John Hancock Insurance's Vitality product and Long-term Care Performance product continue to gain momentum."  

Wealth and Asset Management gross flows in 4Q15 were a record US$13.3 billion, an increase of 50% compared with 4Q14 (21% increase excluding acquired business), driven by another strong sales quarter in John Hancock ("JH") Investments and robust mid-market sales in the pension business acquired by JH Retirement Plan Services ("JH RPS").  Full year gross flows were US$47.2 billion in 2015, an increase of 26% compared with 2014 (10% increase excluding acquired business).

• JH Investments 4Q15 gross flows of US$7.4 billion and full year 2015 gross flows of US$28.2 billion represented increases of 29% and 14%, respectively, compared with the prior year periods. Record gross flows and robust net inflows of $10.4 billion were achieved for the year despite flat markets and rising volatility. Assets under management increased 12% from the prior year to a record US$83.6 billion and for the 17^th consecutive quarter JH Investments net flows were positive. Our 12-month trailing organic growth rate through December 2015 (calculated as net new flows as a percentage of beginning assets) was 15% compared with an industry decline of 1%.¹⁴
• JH RPS 4Q15 gross flows of US$5.9 billion and full year 2015 gross flows of US$19.0 billion represented increases of 88% and 47%, respectively, compared with the prior year periods (increases of 5% and 3%, respectively, excluding acquired business). The increased gross flows were driven by the strong performance in both our core small-case and mid-market segments which resulted in the highest quarterly gross flows in JH RPS history. The acquired business contributed US$2.6 billion of 4Q15 total gross flows and US$5.7 billion of full year 2015 gross flows.

Insurance sales in 4Q15 of US$127 million and full year 2015 sales of US$488 million, represented decreases of 17% and 3%, respectively, compared with the prior year periods. The Vitality program gained momentum in 4Q15 as we added the feature to three Variable Universal Life products to complement the Term, Protection Universal Life and Indexed Universal Life product offerings which already carried the Vitality feature. 

• JH Life sales of US$119 million in 4Q15 (4Q14 – US$140 million) reversed the trend of year-over-year growth seen in the first three quarters of 2015 as momentum in Vitality and Term sales was more than offset by the impact of competitive pressures for accumulation-oriented products. Full year 2015 life insurance sales of US$447 million were slightly higher (US$8 million) than 2014. Growth in the International and protection-oriented segments and the positive trends in Vitality and Term sales were mostly offset by the competitive pressures highlighted above.
• JH Long-Term Care ("JH LTC") 4Q15 sales of US$8 million were $6 million lower than 4Q14 and full year 2015 sales of US$41 million were 34% lower than 2014. We continued to transition sales to our new innovative Performance LTC product, with sales trending upward during 4Q15.

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^{13 For each fund with at least a 3-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return that accounts for variation in a fund's monthly performance (including effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category, the next 22.5%, 35%, 22.5% and bottom 10% receive 5, 4, 3, 2 or 1 star, respectively. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance associated with its 3-, 5- and 10 year (if applicable) Morningstar Rating metrics. Past performance is no guarantee of future results. The overall rating includes the effects of sales charges, loads and redemption fees, while the load-waived does not. Load-waived rating for Class A shares should only be considered by investors who are not subject to a front-end sales charge
14 Source:  Strategic Insight:  ICI Confidential.  Direct Sold mutual funds, fund-of-funds and ETF's are excluded. Organic sales growth rate is calculated as net new flows divided by beginning period assets. Industry data through December 2015.}

Investment Division
Warren Thomson, Senior Executive Vice President and Chief Investment Officer, said, "In 2015, we reported General Fund net investment-related experience charges of $530 million as a result of the impact of the sharp decline in oil prices more than offsetting our other investment experience. We believe our oil and gas holdings are well positioned to recover once the market supply and demand imbalance is corrected. Other categories, including fixed income reinvestment and credit, contributed investment-related experience gains of $346 million, partially offsetting the $876 million of charges related to oil prices. We continue to believe that $400 million per year in investment-related experience is a reasonable estimate of our long-term through-the-cycle investment experience.¹⁵"

Kai Sotorp, President and CEO, Manulife Asset Management ("MAM") & Executive Vice President and Global Head of Wealth and Asset Management, said, "Despite continued volatility in global capital markets, we continued to experience strong results in our overall WAM businesses in the fourth quarter with net flows of $8.7 billion. We delivered core EBITDA¹⁶ of $305 million in the fourth quarter, up 20% from the prior year. For the full year, net flows were $34.4 billion and we generated $1.2 billion of core EBITDA."

Mr. Sotorp continued, "In 2015, we achieved several important milestones in our asset management business. MAM's growth as a premier asset manager was bolstered by record net sales, excellent investment management performance, expanded capabilities, and a diverse global client base. We created a Dublin-based UCITS fund structure to support European distribution. The acquisition of Standard Life significantly expanded MAM's liability-driven investment solutions capabilities. We continue to leverage our longstanding experience in private markets to work with investors to provide unique opportunities to meet their investment goals."

As at December 31, 2015 total assets managed by MAM were $417 billion (2014 - $320 billion), including $362 billion managed for external clients. Assets managed for external clients increased $21 billion from September 30, 2015 and $84 billion from December 31, 2014. At December 31, 2015, MAM had a total of 95 Four- or Five-Star Morningstar rated funds, an increase of 23 funds since December 31, 2014.

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^{15 See "Caution regarding forward-looking statements" below.
16 This item is a non-GAAP measure.  See "Performance and Non-GAAP Measures" below.}

CORPORATE ITEMS
In a separate news release today, the Company announced that the Board of Directors approved an increase of 9% or 1.5 cents per share to the quarterly shareholders' dividend resulting in a dividend of 18.5 cents per share on the common shares of MFC, payable on and after March 21, 2016 to shareholders of record at the close of business on February 24, 2016.

The Board of Directors also approved that, in respect of MFC's March 21, 2016 common share dividend payment date, and pursuant to MFC's Canadian Dividend Reinvestment and Share Purchase Plan and its U.S. Dividend Reinvestment and Share Purchase Plan, the required common shares be purchased on the open market. The purchase price of such shares will be based on the average of the actual cost to purchase such common shares. There are no applicable discounts because the common shares are being purchased on the open market and are not being issued from treasury.

Awards & Recognition
In Canada, Manulife was named as one of Canada's 10 "Most Admired Corporate Cultures of 2015" by Waterstone Human Capital in the Enterprise category. Companies are assessed on vision and leadership, recruitment and hiring for fit, cultural alignment and measurement, retention, rewards and recognition, organizational performance and corporate social responsibility.

In China, Manulife-Sinochem was recognized as the "Best Brand" for its brand reliability and recognition for the 4^th consecutive year at the Shanghai Insurance awards. The Company also received the "Critical Disease Insurance Product of the Year" award for a children's health insurance product.

In Hong Kong, Manulife received nine awards at the annual "Benchmark Fund of the Year" awards 2015, including: three Mandatory Provident Funds ("MPF") won "Best-in-Class" awards; the Manulife GS MPF International Equity Fund was given the "Outstanding Achiever" award; two "Best-in-Class" awards in the Investment Manager of the Year - MPF - category; "Outstanding Achiever" in the MPF - Investor Education category; and in the House Awards category, Manulife Asset Management Asia received two "Outstanding Achiever" awards for its performance in Hong Kong equities and U.S. fixed income.

In the U.S., John Hancock Vitality received top honours on Insurance Networking News' list of top insurance "Internet of Things" projects for 2015.

Notes:
Manulife Financial Corporation will host a Fourth Quarter Earnings Results Conference Call at 2:00 p.m. ET on February 11, 2016. For local and international locations, please call 416-340-8530 and toll free in North America please call 1-800-769-8320. Please call in ten minutes before the call starts. You will be required to provide your name and organization to the operator. A replay of this call will be available by 6:00 p.m. ET on February 11, 2016 through February 25, 2016 by calling 905-694-9451 or 1-800-408-3053 (passcode: 6718073).

The conference call will also be webcast through Manulife's website at 2:00 p.m. ET on February 11, 2016. You may access the webcast at: www.manulife.com/quarterlyreports. An archived version of the webcast will be available at 6:00 p.m. ET on the website at the same URL as above.

The Fourth Quarter 2015 Statistical Information Package is also available on the Manulife website at: www.manulife.com/quarterlyreports.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This Management's Discussion and Analysis ("MD&A") is current as of February 11, 2016, unless otherwise noted. This MD&A should be read in conjunction with the MD&A and audited consolidated financial statements contained in our 2014 Annual Report.

For further information relating to our risk management practices and risk factors affecting the Company, see "Risk Factors" in our most recent Annual Information Form, "Risk Management and Risk Factors" and "Critical Accounting and Actuarial Policies" in the MD&A in our 2014 Annual Report, and the "Risk Management" note to the consolidated financial statements in our most recent annual and interim reports.

In this MD&A, the terms "Company", "Manulife", "we", "our" and "us" mean Manulife Financial Corporation ("MFC") and its subsidiaries.

A OVERVIEW

A1 Fourth quarter earnings 
In the fourth quarter of 2015 ("4Q15"), Manulife reported net income attributed to shareholders of $246 million, fully diluted earnings per common share of $0.11 and return on common shareholders' equity ("ROE") of 2.3%, compared with $640 million, $0.33, and 8.1%, respectively, for the corresponding period in 2014.   

Net income attributed to shareholders is comprised of core earnings¹⁷ (consisting of items we believe reflect the underlying earnings capacity of the business), which amounted to $859 million in 4Q15 compared with $713 million in 4Q14, and items excluded from core earnings, which netted to charges of $613 million in 4Q15 compared with charges of $73 million in 4Q14 for a period-over-period $540 million variance.

The $146 million increase in core earnings included $52 million related to our recent acquisitions, as well as the impact of higher sales volumes and product margins in Asia, higher fee income from our WAM businesses reflecting higher asset levels, and a $94 million positive impact of foreign exchange rates. This increase was partially offset by the inclusion of $50 million of core investment gains¹⁵ in 4Q14 core earnings while 4Q15 core earnings had no core investment gains. Core earnings in 4Q15 included a policyholder experience charge of $50 million driven by adverse policyholder experience in the U.S., partially offset by favourable policyholder experience in Asia and Canada. 

The charges for items excluded from core earnings in 4Q15 included a $361 million charge for investment-related experience, primarily due to the impact of sharply lower oil and gas prices on our investment portfolio, along with a number of smaller items totaling $252 million. These items included the unfavourable impact of actuarial model refinements, integration costs, and the direct impact of equity markets and interest rates. In addition, updates to cash flows used in actuarial modelling and future tax impacts also contributed to investment-related experience charges in 4Q15.  

The $73 million of charges for items excluded from core earnings in 4Q14 primarily related to the favourable $377 million from the direct impact of interest rates and equity markets offset by $353 million of investment-related experience losses, a $50 million reclassification of investment-related experience to core earnings in 2014 as well as a few smaller items. 

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^{17 This item is a non-GAAP measure. See "Performance and Non-GAAP Measures" below.}

A2 Full year earnings 
Manulife's full year 2015 net income attributed to shareholders was $2.2 billion compared with $3.5 billion for full year 2014. Core earnings for 2015 amounted to $3.4 billion compared with $2.9 billion in 2014 and items excluded from core earnings were net charges of $1.2 billion in 2015 compared with net gains of $0.6 billion in 2014. 

The $540 million increase in core earnings included $155 million related to recent acquisitions, the impact of new business growth and $325 million related to changes in foreign exchange rates, partially offset by the inclusion of $200 million of core investment gains in 2014 core earnings while 2015 core earnings included none. On a divisional basis, Asia core earnings increased by 18% after adjusting for the impact of currency rates, reflecting strong growth in new business volumes combined with higher product margins and favourable product mix and policyholder experience. Canada core earnings increased by 36%, of which approximately half was related to the recent acquisition. U.S. core earnings declined 4% after adjusting for the impact of currency rates, reflecting unfavourable policyholder experience and lower tax benefits, partially offset by higher WAM fee income from higher asset levels. In 2015, unfavourable policyholder experience netted to a charge of $205 million with unfavourable policyholder experience reported in the U.S. and Canada partially offset by favourable policyholder experience in Asia.

In 2015, the net charges related to items excluded from core earnings of $1.2 billion included $530 million of investment-related experience charges ($876 million related to the sharp decline in oil and gas prices offset by $346 million related to favourable investment-related experience in other asset classes and fixed-income reinvestment activities), $451 million of charges for changes in actuarial methods and assumptions, $149 million of integration and acquisition costs, $93 million related to the direct impact of interest rates and equity markets and a net $14 million of other items.

In 2014, the net gains related to items excluded from core earnings of $613 million consisted of $359 million for investment-related experience ($559 million total investment-related experience less the $200 million reclassification to core earnings). The remaining $254 million included gains mostly related to the direct impact of interest rates and equity markets of $412 million, partially offset by $198 million of charges for changes in actuarial methods and assumptions. 

A3 Sales
Insurance sales¹⁸ in 4Q15 were $1,027 million, an increase of 22%¹⁹ compared with 4Q14. Full year 2015 insurance sales were $3.4 billion, an increase of 24% compared with 2014.

In 4Q15, the strong growth in insurance sales was driven by solid double digit growth in Asia and normal variability in large-case group benefit sales in Canada. In Asia, insurance sales increased 20%, driven by double digit growth in most territories. Canadian insurance sales increased 76%, driven by normal variability in large-case group benefits sales. U.S. insurance sales decreased 17% due to competitive pressures in the life insurance market and lower Long-Term Care sales.

In 2015, the strong growth in insurance sales was driven by Asia, which grew 28%, and normal variability in large-case group benefit sales in Canada. In Asia, we achieved our 3rd consecutive year of record insurance sales, reflecting the success of product and marketing initiatives and expansion of our distribution channels.  In Canada, sales also benefited from strong retail sales. In the U.S., insurance sales decreased 3% as an increase in Life insurance sales was more than offset by lower Long-Term Care sales.

Wealth and Asset Management net flows¹⁸ were $8.7 billion in 4Q15, an increase of $5.9 billion compared with 4Q14.  Full year net flows were $34.4 billion, an increase of $16.1 billion compared with 2014.   

4Q15 marked the 24th consecutive quarter of positive net flows into our wealth and asset management businesses. Driving the strong net flows were robust gross flows¹⁸ of $31.1 billion, up 53% from 4Q14 (up 29% excluding recently acquired businesses), and solid retention. Asia gross flows increased 7% compared with the prior year period due to strong growth in mutual fund sales in mainland China and continued strong pension sales in Hong Kong. In Canada, gross flows increased 45% driven by strong mutual fund gross flows and the impact of the recent acquisition (up 5% excluding the recent acquisition). U.S. gross flows increased 50% (up 21% excluding the impact of the recent acquisition), driven by a record quarter in pensions and continued strong mutual fund gross flows. Manulife Asset Management ("MAM") gross flows more than doubled driven by significant fixed income mandates in Japan and South Korea.

In 2015, driving the strong net flows were robust gross flows of $114.7 billion, up 46% from 2014 (up 32% excluding recently acquired businesses), and solid retention. Asia gross flows increased 56% compared with the prior year period due to strong growth in mutual fund sales in mainland China and continued strong pension sales in Hong Kong. In Canada, gross flows increased 57% driven by strong pension and mutual fund gross flows and the impact of the recent acquisition (up 22% excluding the recent acquisition). U.S. gross flows increased 26%, driven by strong mutual fund gross flows and the recent acquisition of New York Life's pension business (up 10% excluding the recent acquisition). Manulife Asset Management ("MAM") gross flows more than doubled driven by significant fixed income mandates.

Other Wealth sales¹⁸ were $2.1 billion in 4Q15, an increase of 80% compared with 4Q14 (47% excluding recent acquisitions). Full year Other Wealth sales were $7.5 billion, an increase of 89% compared with 2014.²⁰

In 4Q15, Other Wealth sales in Asia almost doubled compared with 4Q14 driven by expanded distribution and recent product launches in Japan, and sales in Canada benefited from contributions from the recent acquisition.

In 2015, Other Wealth sales increased 89% compared with 2014 as sales in Japan nearly tripled due to enhanced distribution and the success of new products, and sales in Canada benefited from contributions from the recent acquisition.

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18 This item is a non-GAAP measure. See "Performance and Non-GAAP Measures" below.
19 Growth (declines) in sales, gross flows and assets under management and administration are stated on a constant currency basis. Constant currency basis is a non-GAAP measure. See "Performance and Non-GAAP Measures" below.
20 The U.S. division does not have any sales in this category.}

A4    MCCSR, financial leverage ratio and remittances
The Minimum Continuing Capital and Surplus Requirements ("MCCSR") ratio was 223% for The Manufacturers Life Insurance Company ("MLI") at the end of 2015, compared with 248% at the end of 2014. The decrease of 25 points over the year primarily reflected capital deployed for the Standard Life acquisition and growth in required capital that outpaced earnings.

MFC's financial leverage ratio was 23.8% at December 31, 2015 compared with 27.8% at the end of 2014.  The improvement reflected the impact of a strengthening U.S. dollar compared with the Canadian dollar, the conversion of subscription receipts into common equity following the closing of the Standard Life acquisition and an increase in retained earnings.

Operating divisions delivered $2.2 billion in remittances²¹ to the Group in 2015, compared with $2.4 billion in 2014.

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21 Remittances are defined as cash remitted by operating subsidiaries and excess capital generated by stand-alone Canadian operations and available for deployment by Manulife.}

A5 Update on the Standard Life transaction

In 2015, Standard Life contributed $169 million to core earnings, which included a $35 million post-tax charge for the amortization of intangibles. Standard Life contributed $2 million to net income, excluding $99 million of integration costs which is excluded from core earnings. Other items excluded from core earnings attributable to the Standard Life acquisition were a net charge of $167 million of which $156 million was related to the direct impact of equity markets and interest rates as well as other investment-related experience and $11 million was due to the impact of changes in actuarial methods and assumptions.  

In 2014, we disclosed our expectations against certain metrics and as reported below, we are on plan to achieve those targets.   

• We expected earnings from the acquisition before transition costs, integration costs and the direct impact of markets during 2015 would be marginally accretive in 2015 and accretive by approximately $0.03 to earnings per common share ("EPS") in 2016, 2017 and 2018.²² When we set these expectations, we assumed a zero impact related to the direct impact of equity markets and interest rates. In 2015, post-closing transaction earnings were $0.05 accretive both to Core EPS and to EPS adjusted for the above noted items.
• We expected to achieve $100 million of annual after-tax cost savings largely by the 3rd year.²² At the end of 2015, we have achieved annual run rate cost savings of $65 million after-tax, well on our way to meeting the target.
• We also stated that we expected total integration costs over the first three years would be $150 million post-tax, which remains our best estimate.²² In 2015, we incurred $80 million of post-tax integration costs.
• Going forward, as a result of merging of the businesses it will not be possible to segregate the earnings contribution from Standard Life and therefore not possible to report on EPS accretion; however, we expect to achieve these original targets and have built them into our plans.²²

A6 Update on Efficiency and Effectiveness initiative
Our Efficiency and Effectiveness ("E&E") initiative, announced November 2012, is aimed at leveraging our global scale and capabilities to achieve operational excellence and cost efficiencies throughout the organization. We set a target of $400 million net pre-tax E&E savings in 2016, and we now expect to exceed that target.²² In 2015, we achieved pre-tax savings of $350 million. These savings have enabled us to fund other new initiatives to sustain our long-term earnings growth. The amount of that investment is subject to change as our strategy unfolds. In particular, we intend to continue to ensure that projects are appropriately sequenced and prioritized.

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22  See "Caution regarding forward-looking statements" below.}

A7 Core ROE expansion over the medium term
Core ROE was 9.2% in 2015, and given the deployments of capital to pursue long-term growth, along with the impact on equity of the strengthening U.S. dollar compared to the Canadian dollar, we no longer believe our Core ROE objective of 13% is achievable in 2016. We expect Core ROE to expand toward 13% or more over the medium term as we execute on our strategy and investment-related experience normalizes.²³ We expect the primary driver of Core ROE expansion to be organic growth of our less capital intensive/higher ROE businesses, particularly our Asia and Wealth and Asset Management businesses, supplemented by contributions from recent major acquisitions and partnerships as well as further savings from our Efficiency and Effectiveness initiatives. We currently estimate that recent major acquisitions and partnerships will contribute $400 million to $450 million to annual core earnings over the medium term.²³ Thereafter, the contribution could grow further driven by long-term strategic partnerships in Asia and revenue synergies.²³ Recent major acquisitions and partnerships include transactions with Standard Life plc, New York Life, DBS, and Standard Chartered. Going forward, as a result of integration with our business, it will not be possible to isolate the individual core earnings impact from these transactions and therefore not possible to report on their contribution.

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^{23 See "Caution regarding forward-looking statements" below.}  

B FINANCIAL HIGHLIGHTS

B1 Fourth quarter and full year earnings analysis

The table below reconciles reported net income attributed to shareholders to core earnings.

Components of the direct impact of equity markets and interest rates and variable annuity guarantee liabilities in the table above: 

B2 Revenue

For 4Q15, total revenue was $10.4 billion compared with $16.0 billion in 4Q14, and full year 2015 total revenue was $34.4 billion compared with $54.4 billion in 2014. The impact of fair value accounting materially impacts the reported realized and unrealized gains or losses on assets supporting insurance and investment contract liabilities, a component of revenue (see section B6 "Impact of fair value accounting" below).  Accordingly, we discuss specific divisional drivers of revenue before unrealized gains and losses in section C "Performance by Division". For full year 2015, total revenue was also impacted by the completion of the reinsurance of John Hancock's closed block of participating policies ("Closed Block"), where we reported a net reinsurance premium ceded of $8.0 billion. (The net reinsurance premium ceded was fully offset by an increase in the change in reinsurance assets on the Statement of Income).  

For 4Q15, revenue before realized and unrealized gains and premiums ceded under the Closed Block reinsurance transaction was $12.3 billion compared with $9.8 billion in 4Q14. The increase was driven by business growth including the impact of recent acquisitions as well as the impact of foreign exchange rates.  

In 4Q15, the net realized and unrealized losses on assets supporting insurance and investment contract liabilities and on the macro hedging program were $1.9 billion, primarily driven by an increase in North American swap and interest rates, and partially offset by the impact of higher equity markets and real estate valuation gains in the U.S.

For full year 2015, revenue before realized and unrealized losses and premiums ceded under the Closed Block reinsurance transaction was $45.5 billion compared with $37.3 billion in 2014. The increase was driven by business growth, including the impact of recent acquisitions, as well as the impact of foreign exchange rates.  

In 2015, the net realized and unrealized losses on assets supporting insurance and investment contract liabilities and on the macro hedging program were $3.1 billion, primarily driven by the increase in North American swap and interest rates, and partially offset by real estate revaluation gains, primarily in the U.S.

B3 Premiums and deposits²⁴  

Premiums and deposits is an additional measure of our top line growth, as it includes all customer cash inflows. Premiums and deposits for insurance products were $7.8 billion in 4Q15, an increase of 7% on a constant currency basis compared with 4Q14. For the full year, insurance premiums and deposits were $29.5 billion, which exclude the impact of the Closed Block reinsurance transaction, an increase of 10% on a constant currency basis compared with 2014.

Premiums and deposits for Wealth and Asset Management ("WAM") products were $31.1 billion in 4Q15, an increase of $13.2 billion, or 53% on a constant currency basis, compared with 4Q14 (29% increase excluding recently acquired businesses). For the full year, WAM premiums and deposits were $114.7 billion, an increase of 46% on a constant currency basis over 2014.

Premiums and deposits for Other Wealth products were $2.0 billion in 4Q15, an increase of $1.0 billion, or 85% on a constant currency basis (63% increase excluding recently acquired businesses). For the full year, Other Wealth premiums and deposits were $6.7 billion, an increase of 65% on a constant currency basis over 2014.

B4 Assets under management and administration²⁴
Assets under management and administration as at December 31, 2015 were $935 billion, an increase of $244 billion compared with December 31, 2014. The increase included $118 billion from recent acquisitions net of the Closed Block reinsurance transaction. The wealth and asset management portion of AUMA was $511 billion and increased $196 billion. The increase was driven by strong net inflows and contributions of $109 billion related to recent acquisitions.

B5 Capital²⁴
MFC's total capital as at December 31, 2015 was $49.9 billion, an increase of $10.3 billion from December 31, 2014. The increase from December 31, 2014 was primarily driven by net income attributed to shareholders of $2.2 billion, favourable impacts of foreign exchange rates of $5.3 billion, the Standard Life acquisition ($2.2 billion issuance of MFC common shares and assumption of $0.4 billion of outstanding Standard Life debt), and other net capital issued of $1.75 billion, partially offset by cash dividends of $1.4 billion over the period.

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24 This item is a non-GAAP measure. See "Performance and Non-GAAP Measures" below.}

B6 Impact of fair value accounting
Fair value accounting policies affect the measurement of both our assets and our liabilities. The impact on the measurement of both assets and liabilities of investment activities and market movements are reported as experience gains (losses) on investments, the direct impact of equity markets and interest rates and variable annuity guarantees, each of which impacts net income (see section A1 "Fourth quarter earnings" above for a discussion of fourth quarter experience).

Net realized and unrealized losses reported in investment income were $1.9 billion for 4Q15 (4Q14 – gains of $6.2 billion) as noted above in section B2 "Revenue". 

As outlined in the "Critical Accounting and Actuarial Policies" in the MD&A in our 2014 Annual Report, net insurance contract liabilities under IFRS are determined using CALM, as required by the Canadian Institute of Actuaries. The measurement of policy liabilities includes the estimated value of future policyholder benefits and settlement obligations to be paid over the term remaining on in-force policies, including the costs of servicing the policies, reduced by the future expected policy revenues and future expected investment income on assets supporting the policies. Investment returns are projected using current asset portfolios and projected reinvestment strategies. Experience gains and losses are reported when current period activity differs from what was assumed in the policy liabilities at the beginning of the period. We classify gains and losses by assumption type. For example, current period investing activities that increase (decrease) the future expected investment income on assets supporting policies will result in an investment-related experience gain (loss).

B7 Impact of foreign exchange rates
Changes in foreign exchange rates, primarily due to the strengthening of the U.S. dollar compared with the Canadian dollar, increased core earnings by $94 million in 4Q15 compared with 4Q14 and $325 million for 2015 compared with 2014. The impact of foreign currency on items excluded from core earnings is not relevant given the nature of these items. As applicable, each line item on our financial statements has been impacted by changes in foreign exchange rates.

PERFORMANCE BY DIVISION

C1 Asia Division

Asia Division's 4Q15 net income attributed to shareholders was $428 million compared with $336 million in 4Q14. Net income attributed to shareholders is comprised of core earnings, which was $353 million in 4Q15 compared with $260 million in 4Q14, and items excluded from core earnings, which amounted to a net gain of $75 million in 4Q15 compared with $76 million in 4Q14.

Expressed in U.S. dollars, the presentation currency of the division, net income attributed to shareholders was US$321 million in 4Q15 compared with US$297 million for 4Q14 and core earnings were US$264 million in 4Q15 compared with US$229 million in 4Q14. Items excluded from core earnings were a net gain of US$57 million for 4Q15 compared with US$68 million in 4Q14.

Core earnings increased US$41 million, or 18%, compared with 4Q14 after adjusting for the impact of changes in currency rates. The increase was driven by strong growth in new business volumes and improvement in product margins, partially offset by expenses related to investments in growth initiatives. On a Canadian dollar basis, core earnings increased by $93 million to $353 million in 4Q15 due to the factors above, and reflect a net $44 million favourable impact from changes in currency rates in territories where we operate versus the Canadian dollar.

The US$57 million net gain in items excluded from core earnings in 4Q15 are primarily related to the impact of the increase in equity markets partially offset by declining interest rates.  

Asia Division's full year 2015 net income attributed to shareholders was $1,176 million compared with $1,247 million in 2014. Net income attributed to shareholders is comprised of core earnings, which was $1,305 million in 2015 compared with $1,008 million in 2014, and items excluded from core earnings, which amounted to a net charge of $129 million in 2015 compared with a net gain of $239 million in 2014.

Expressed in U.S. dollars, the presentation currency of the division, full year 2015 net income attributed to shareholders was US$921 million compared with US$1,129 million for 2014 and core earnings was US$1,019 million in 2015 compared with US$913 million in 2014. Items excluded from core earnings were a net charge of US$98 million in 2015 compared with a net gain of US$216 million in 2014.

Core earnings in 2015 increased US$154 million compared with 2014, after adjusting for the US$48 million impact of changes in currency rates, reflecting strong growth in new business volumes combined with higher product margins, favourable product mix and policyholder experience, partially offset by expenses related to growth initiatives. On a Canadian dollar basis, full year 2015 core earnings increased by $297 million to $1,305 million due to the factors above, and reflect a net $120 million favourable impact due to the relative appreciation of local currencies in territories where we operate versus the Canadian dollar. The change of US$314 million in items excluded from core earnings primarily related to changes in the direct impact of equity markets and interest rates.

Revenue before unrealized and realized investment gains was US$3.2 billion in 4Q15 compared with US$2.4 billion in 4Q14, an increase of 35% driven by strong sales growth together with stable in-force growth. For full year 2015, revenue before unrealized and realized investment gains was US$11.3 billion, an increase of 27% due to strong sales growth, notably from Japan.

Premiums and deposits of US$5.5 billion in 4Q15 increased 24% compared with 4Q14. Premiums and deposits for insurance products of US$2.0 billion increased 29% over 4Q14 driven by record sales growth from most of the territories and robust recurring premium growth from in-force business. Wealth and Asset Management premiums and deposits of US$2.5 billion in 4Q15 increased by 7% over 4Q14 driven by higher mutual fund deposits, particularly from mainland China and solid growth in pension deposits in Hong Kong. Other Wealth premiums and deposits of US$0.9 billion in 4Q15 increased by 90% over 4Q14 driven by the success of new product launches coupled with expanding distribution reach.

Premiums and deposits for the full year 2015 were US$22.6 billion, an increase of 48% compared with 2014. Of this, premiums and deposits for insurance products were US$7.4 billion, an increase of 23% compared with 2014, due to strong sales growth and robust recurring premium growth from in-force business. Wealth and Asset Management premiums and deposits were US$12.2 billion, an increase of 56%, reflecting new fund launches, notably in mainland China and solid growth in pension deposits in Hong Kong. Other Wealth premiums and deposits of US$3.0 billion were double 2014 levels driven by the success of new product launches coupled with expanding distribution reach.

Assets under management were US$77.7 billion as at December 31, 2015, an increase of 6% on a constant currency basis compared with December 31, 2014, driven by net customer inflows of US$6.6 billion and investment income during 2015.

C2 Canadian Division

Canadian Division's 4Q15 net loss attributed to shareholders was $102 million compared with net income of $73 million in 4Q14.  Net income (loss) attributed to shareholders is comprised of core earnings, which was $354 million in 4Q15 compared with $224 million in 4Q14, and items excluded from core earnings, which were net charges of $456 million in 4Q15 compared with net charges of $151 million in 4Q14.

The $130 million increase in core earnings included $63 million related to the acquired business, the favourable impact from in-force business growth, the methodology change for attributing expected investment income on assets supporting provisions for adverse deviation and favourable policyholder experience. The 4Q15 loss in items excluded from core earnings included the impact of unfavourable market and investment-related experience, costs related to the recapture of a reinsurance treaty and, to a lesser extent, integration costs related to the acquired business.

Canadian Division's full year 2015 net income attributed to shareholders was $486 million compared with $1,003 million in 2014. Net income attributed to shareholders is comprised of core earnings, which was $1,258 million for 2015 compared with $927 million for 2014, and items excluded from core earnings, which amounted to a net charge of $772 million for 2015 compared with a net gain of $76 million in 2014.

The $331 million increase in core earnings over the prior year includes $158 million attributable to the Standard Life acquisition. The increase also reflects the favourable impact of a methodology change for attributing expected investment income on assets supporting provisions for adverse deviations and higher fee income from our WAMbusinesses reflecting higher asset levels, partially offset by unfavourable policyholder experience. The year-over-year decrease of $848 million in items excluded from core earnings was driven by unfavourable market and investment-related experience, integration and acquisition expenses related to the acquired business and a number of one-time items.

Revenue before unrealized and realized investment gains was $2.7 billion in 4Q15 compared with $2.3 billion in 4Q14 due to higher premium and investment income offset by the impact from recapture of a reinsurance treaty.  Full year 2015 revenue before unrealized and realized investment gains was $10.8 billion compared with $9.6 billion in 2014 also driven by higher premium income.

Premiums and deposits in 4Q15 were $7.0 billion, $1.6 billion higher than in 4Q14, and full year 2015 premiums and deposits were $29.3 billion, $7.7 billion higher than in 2014. The acquired business added $1.5 billion in the quarter and $5.3 billion for the full year to premiums and deposits. Our WAM businesses contributed $1.2 billion of the increase for the quarter and $6.0 billion of the increase for the full year.

Assets under management were $218.7 billion as at December 31, 2015, an increase of $59.8 billion from December 31, 2014, including $54.4 billion related to the acquired business. Excluding the acquired business, AUM increased by $5.4 billion, or 3%, driven by business growth.

C3 U.S. Division

U.S. Division's 4Q15 net income attributed to shareholders was $341 million compared with $506 million in 4Q14. Net income attributed to shareholders is comprised of core earnings, which amounted to $350 million in 4Q15 compared with $338 million in 4Q14, and items excluded from core earnings, which amounted to net charges of $9 million in 4Q15 compared with net gains of $168 million in 4Q14.

Expressed in U.S. dollars, the functional currency of the division, 4Q15 net income attributed to shareholders was US$255 million compared with US$444 million in 4Q14, core earnings was US$262 million compared with US$297 million in 4Q14, and items excluded from core earnings were a net charge of US$7 million in 4Q15 compared with a net gain of US$147 million in 4Q14. The US$35 million decrease in core earnings was driven by reduced new business gains in Insurance primarily from product mix changes and lower sales, and unfavourable policyholder experience primarily due to JH LTC. These impacts were partially offset by higher wealth and asset management fee income reflecting increased asset levels. On a Canadian dollar basis, core earnings increased by $12 million as the strengthening of the U.S. dollar compared with the Canadian dollar accounted for a $53 million increase in core earnings that more than offset the net unfavourable drivers mentioned above.

U.S. Division's full year 2015 net income attributed to shareholders was $1,531 million compared with $2,147 million in 2014. Net income attributed to shareholders is comprised of core earnings which amounted to $1,537 million in 2015 compared with $1,383 million in 2014, and items excluded from core earnings, which amounted to net charges of $6 million compared with net gains of $764 million in 2014. The strengthening of the U.S. dollar compared with the Canadian dollar accounted for $207 million of the increase in core earnings.

Expressed in U.S. dollars, the functional currency of the division, full year 2015 net income attributed to shareholders was US$1,194 million compared with US$1,946 million in 2014, core earnings was US$1,205 million compared with US$1,252 million in 2014, and items excluded from core earnings were a net charge of US$11 million in 2015 compared with a net gain of US$694 million in 2014. The US$47 million decrease in core earnings was driven by unfavourable policyholder experience in JH Insurance, lower tax benefits, higher non-deferrable acquisition costs related to higher wealth and asset management gross flows and modestly lower new business gains in JH Insurance. These items were partially offset by lower amortization of deferred acquisition costs due to the run-off of the in-force variable annuity business and higher wealth and asset management fee income reflecting higher asset levels. The unfavourable policyholder experience in JH Insurance was primarily due to JH LTC and large claims in JH Life.

Revenue before unrealized and realized investment gains was US$4.0 billion in 4Q15 compared with US$4.2 billion in 4Q14. The decrease primarily relates to lower investment income following the transfer of assets as part of the Closed Block reinsurance transaction. Full year 2015 revenue before unrealized and realized investment gains and the net activity associated with the Closed Block transaction in 3Q15 was US$15.6 billion compared with US$15.8 billion in 2014.  The slight decrease was driven by reduced premium and investment income as a result of the ongoing impact of the Closed Block reinsurance transaction partially offset by higher wealth and asset management fee income reflecting higher asset levels. 

Premiums and deposits for 4Q15 were US$15.4 billion, an increase of 40%²⁵ compared with 4Q14.  Premiums and deposits for insurance products were US$1.7 billion, a decrease of 9% compared with 4Q14, due to lower universal life sales. Premiums and deposits for wealth and asset management products 4Q15 were US$13.3 billion, an increase of 50% compared with 4Q14, driven by record mutual fund sales and the RPS acquisition.

Premiums and deposits for full year 2015 were US$55.0 billion, an increase of 21% compared with 2014. Premiums and deposits for insurance products of US$6.7 billion were flat compared with 2014, as sales activity was dampened by competitive pressures. Premiums and deposits for wealth and asset management products were US$47.2 billion, an increase of 26% compared with 2014, reflecting strong deposits in JH RPS including the recently acquired mid-market business, as well as from record deposits in JH Investments. 

Assets under management and administration as at December 31, 2015 were US$388.2 billion, an increase of US$44.7 billion from December 31, 2014. The acquisition of the Retirement Plan Services business contributed US$45.3 billion (net increase in wealth and asset management assets of US$56.6 billion partially offset by the transfer of US$11.3 billion of assets as part of the Closed Block reinsurance transaction) and robust net mutual fund flows contributed an additional US$10.4 billion in 2015. These items were partially offset by the continued run-off of the in-force annuity business. 

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25 Growth (declines) in sales, gross flows, premiums and deposits and assets under management and administration are stated on a constant currency basis. Constant currency basis is a non-GAAP measure. See "Performance and Non-GAAP Measures" below.}

C4 Corporate and Other