EVENT DATE/TIME: SEPTEMBER 19, 2013 / 2:35PM GMT

THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT MFC.TO - Manulife Financial Corporation at CIBC Eastern Institutional Investor EVENT DATE/TIME: SEPTEMBER 19, 2013 / 2:35PM GMT

CORPORATE PARTICIPANTS Scott Hartz Manulife Financial Corporation - EVP, General Account Investments CONFERENCE CALL PARTICIPANTS Robert Sedran CIBC World Markets - Analyst PRESENTATION Okay, welcome back, everybody. A lot at Manulife has changed over the last several years. But one area that has not changed as much, unless Scott is going to say otherwise, is the part that actually performed quite well through the crisis, the investment book. Scott Hartz is Executive VP of General Account Investments at Manulife. Scott began his career with John Hancock in 1983. Subsequent to John Hancock's acquisition by Manulife in 2004 he was responsible for bond and corporate finance group and later for all of the Company's US balance sheet investments. In his current position he oversees all Canadian, US and Asian general account investments. So, welcome back to the conference, Scott. Well, thank you, Rob, and thank you for inviting me and for those kind words about the performance. And let me start by just introducing a little bit about my responsibility and how the portfolio is positioned. My job is to oversee the general account balance sheet, so we have a little over CAD200 billion of assets there and it is about half in the US, about a third in Canada and the remainder, about a sixth, over in Asia. And I think I actually have one of the better jobs in the Company; I am responsible for the investing activities and don't have to take care of the back and middle office and all the rest of it fortunately. And at Manulife we also have an asset management Company, Manulife Asset Management, which really focuses on other people's money and that is largely entirely public bonds and stocks, total return for mutual funds, pension funds and so forth. And so we split those two duties. And so, again, my focus is on the general fund. And when I think about the asset allocation in our general fund, we are predominantly fixed income, as you would expect at a life insurance company given our liabilities, and we very much are driven to manage against the liabilities. And so, about 86% is in fixed income. And within the fixed income it's -- in very broad terms it is roughly a third governments, which is maybe higher than we would like, some good reasons to have them and some -- maybe we would like to redeploy some of those. It's about a third public corporate bonds and then it is about a third in more private asset types like private placement bonds, largely corporate bonds, but some project finance, commercial mortgages and then some residential mortgages invested in -- at our bank in Canada, most of those are CMHC insured. So that is the fixed income portfolio. And then on the rest of it, the other 14%, there is 6% in public equities, which largely are passed through to the policyholders. We have some businesses where we pass through the experience; we don't have a lot of public equity that falls to the shareholder account. And then the other 8%, which is a bit of unique part which I am sure we will get into, is the alternative assets which has kind of become en vogue these days in the low interest rate environment. But at Manulife we have been investing in alternatives for decades. Our strategy really has not changed; we have very long-lived liabilities and we back a portion of the liabilities beyond 30 years with alternative assets. And we have a nice diversified set of those that we think has provided great value over the years and would expect it to continue to do so. 2

Do you maybe want to, just in terms of -- that was a great overview of sort of the way the balance sheet is structured. Do you want to maybe talk a little bit about the process and how big your group is and how many people are overseeing these assets just to give us a sense of what the procedures are? Sure. And we have changed things a little bit recently to have more of a North American focus. And I did mention about a sixth of our assets over in Asia, and, while I have responsibility for those, those are almost entirely public assets and we're in 11 different countries there and it doesn't really make sense to set up two investment groups. So Manulife Asset Management, our asset manager actually manages those assets and my relationship is I'm their biggest customer. So I'm going to speak really to how we invest in North America where we get more involved in the pilot markets. We have roughly 250 investment professionals and recently reorganized to focus along product line in North America. Before we had a real focus in the US and a similar group in Canada all doing very, very similar things. And at the beginning of the year we brought those two groups together so that they have a head of North American commercial mortgages, head of North American bonds, head of North American private equity, head of North American portfolio management, head of North American credit. And it is been good to share best practices to flex resources and so forth. So there has been that change but other than that we have had a very consistent approach to the markets, which I don't know if it is unique, but it is a little different from how others are organized. And part of the objective is to avoid silos. Whenever you are in a silo you can kind of get picked off by the market. And so part of, again, moving to North America was to break what was a little bit of a silo between Canada and the US. But within the markets there our portfolio management group looks over all the assets. We don't have a separate portfolio manager for public bonds, private bonds, commercial mortgages; we have one portfolio manager that looks across all of those asset types. And then in credit we don't organize our analysts by public, by private, we organize them by sector. So the analysts are looking at all companies in a sector regardless of whether they are public or private. We think that leads to better analysis, better relative value decisions and so forth. And like most insurance companies we have a deep fundamental bottom up credit orientation, we are very much focused, our roots are as a private placement group where you lead to a Company and you are going to live with that loan for the entire life. And we treat public bonds somewhat similarly. When we do long loans we would anticipate holding onto those for the long-term. So we are going to look very carefully and do a lot of heavy analysis. So that is really a characterization I think of most insurance companies, but for us maybe even more so than the rest. I always forget what the E's stand for but I think it is efficiency and effectiveness. Did I get that right I think? There we go. Was there any impact -- is there any impact of those changing processes and headcount and all that stuff? Is that part of what you talked about in terms of bringing the group together? Is there any benefit that might still come? Or is it really more other parts of the Company there? 3

Yes. So efficiency and effectiveness, as part of that across the Company we all did an exercise, which everyone should do periodically, not too often because it is painful. But was to sit back and say am I organized in the best way to be both effective and efficient? And it is a very disruptive process, it takes a lot of time away from senior management, it creates some anxiety as things change, so it is not something you want to do very frequently, but it is good to step back and do that periodically. And I think the investment group is a pretty efficient group and it wasn't so much for us about creating savings, although we did create some savings, but could we be more effective at what we do. And we had did some minor things around the edges, but the main thing that came out of that was what I just described was combining -- and that didn't lead to job cuts necessarily but it led to sharing of best practices so that we can be more effective. So there was a little bit of savings created but that really wasn't the goal. Okay. And as always, if anyone has any questions feel free to throw your hands up, I am happy to stop. You mentioned of the 86% in fixed income, about a third of that was in governments. And some of your peers have talked about yield enhancement and the ability to deploy some of that into higher-yielding assets than the rest. I mean, is that an opportunity or is this -- are you at about the level of liquidity you want in that portfolio? Yes, it gets a lot of scrutiny because it is big; it is I think outsized relative to our peers' holdings and governments. And some of that is -- some of that is absolutely where we want to be. In Asia, for example, there is a lot of countries we are in, Vietnam, for example, where you pretty much just buy government bonds. So a chunk of it is in Asia, although it's not even half of it but it's maybe a third of it is in Asia and that is semi permanent I would say. And then in the US and Canada we need to hold some amount for liquidity, but that is more than the amount we need to hold for liquidity purposes. And a big chunk of it in the US in particular, but some in Canada as well, came as we de-risked in 2010 and 2011 and we extended the duration of our asset portfolio to better match our liabilities. We ended up selling some short corporates and buying long governments. To add duration that was the quickest and easiest way to do it. So that portfolio really has grown significantly particularly in those two years. And the objective long-term would be to redeploy that into spread assets. So there really is a big opportunity there. But along with opportunity comes risk as well. 30 year credit risk is much greater than five your credit risk. I mean I talked earlier about how when we make a loan we plan to live with it, of course we will watch it closely and trade out of it if we think appropriately, but we go into it assuming it is something we are going to live with. So when we make 30-year loans we need to be pretty confident about the business model of the Company we are lending to. So something with a lot of technology risk or obsolescent risk; we are way less comfortable making long loans. So we are a careful, very much a bottom-up investor. And particularly when lending long we are a bit cautious and so I do expect we will over time redeploy a portion of those but it will be done in a careful and methodical way. So credit losses are actually very low through the downturn, not just on an absolute basis but even when you compare them to many of your domestic and international peers. I mean is that a function of the asset mix? Is it a function of the risk tolerance that you have? And is there an opportunity to perhaps take a little bit more risk and a little bit more yield and suffer a little bit more loss as well but overall come out ahead? 4

Yes, good question. And, yes, we are proud of the credit experience. I think Moody's does a study on US only which is where most of the problems were, Canada actually fared fairly well through the crisis. And I think the Moody study showed that relative to the big US life companies, Manulife's US portfolio had 37% fewer credit losses. And I think the industry by and large did fairly well with -- there were definitely a few exceptions. And part of it I like to think is this deep fundamental credit analysis we do and we avoided things like the Icelandic banks, which was there were big private placement issuance into the insurance market and we were -- after a lot of analysis concluded that was a train wreck waiting to happen so avoided it. But I would say the bigger driving force is a more macro situation. And that is going into the credit crisis back in 2006, 2007, 2005, risk premiums were very tight. It was hard to find value in the market. And a lot of my peers -- I talk to my peers all the time -- felt a lot of pressure to reach out the risk spectrum, add some income into the books. And a lot of them push back on it, but a lot of them were basically told you need to better use -- you need to more fully use your risk budget, we need the income at the worst possible time. And they didn't pile into junk bonds or anything like that; everyone knew that wasn't priced well. What they did is they moved into things like securitized assets where for the same credit rating, and a high credit rating at that, you could get a little extra yield or do subordinated lending to the big banks because they are too big to fail and one notch down in credit rating you get a bunch more yield. And so I really feel like some of my competitors were pushed into those spaces to try to still be somewhat safe given we weren't getting paid a lot for risk but still taking more risk. And I didn't feel that pressure and (inaudible). As I was talking at an ACOI conference about the financial crisis and the learnings and one of them -- it was a combined CFO/CIO conference and I said, I've been through a number of cycles as an investor and the one in the early 2000's was incredibly painful. We were pushed to take risk to get income and then we had credit losses, we needed to shed risk at a bad time. This time around Manulife never pressured me, allowed us to do what the investment group was (inaudible) the right thing. So one of the lessons is don't let your CFO run your investment book, listen to your investment guys. And it's the only time in my life I've ever given a talk where people spontaneously got up and clapped. It was all the investment guys, not the CFOs, of course. But it was really kind of funny. So anyways, I attribute a lot of it to how Manulife and senior Manulife executives behaved trusting their investment guys, of course, Donald Guloien, our now CEO, was head of the investment group at the time. And part of that was made easier I think by our general investment strategy which is to have a portion of the book in alternatives. And alternatives were performing very well in that environment. And so we were generating above average income in our alternatives which I think made it easier for them not to necessarily need to book more income in the fixed income. So it is a long-winded answer, but those are some of the dynamics that I think led us to go in not reaching for yield in places that turned out people got burned very badly. And just in general I think even if you look at our corporate book I think we are a long-term good investor that has served us well. And you are still disinclined to reach for yield today? Yes, I mean, I am. I was very inclined to reach for yield in 2009 and 2010 and those were -- except for a week or two in there where it seemed like the world was going to end, they were some of the best days that an investor will ever have in terms of the opportunities we had. And those opportunities have declined quite a bit. 5

I would say there are still a few areas of the market we like. We have been over allocating to commercial mortgages in the US for quite a while and continue to do so as spreads there -- because the competition, everything in life almost is about supply and demand. And the supply of money and commercial mortgages, while a lot of it has come back, it has not all come back. And it has kept spreads wide relative to the corporate market compared to where it has been historically. Unlike before the financial crisis where it was almost flipped on its head and we didn't really see how it made any sense to do commercial mortgage lending. So, I don't think I'm really reaching for yield now, but we are continuing to invest. And I would like to deploy some of those governments so, yes, I wouldn't mind adding a little bit to the risk, but not in any kind of outsized way for sure. You know you -- sorry, go ahead. QUESTIONS AND ANSWERS Unidentified Audience Member In terms of (inaudible) risk, where are the opportunities right now? Is it mostly in equity or in (inaudible) take longer to deploy money? So, the question is where is the best place to add risk -- just for the webcast purposes, what asset classes are looking like the best risk reward I guess? Yes. And so on the fixed income side, as I said earlier, I really think commercial mortgages in the US. Now you only want that book to get so big and we certainly have guidelines around how big it should get, but that is clearly a place. We prefer to add risk in our private placement book where we have covenants of things that protect us. Because one of the concerns in the public market, companies are looking pretty strong but they're also starting to do a lot of shareholder friendly activities -- borrowing money not to expand the business but to buy back stock and things that equity investors like. But it doesn't help the fixed income investors so much. When you invest in a private fashion to a company you have covenants that prevent them from doing that, so commercial mortgages, privates relative to publics. Now fixed income versus equity, in our portfolio we don't really invest much in public equity, we have some public equity exposure through our variable annuities and our fee-based businesses. But maybe say alternatives versus fixed income. I think the risk premiums aren't as good as they used to be in the alternatives, but we still see -- and real estate is a good example, commercial real estate. Even though I like lending against it, we have been -- when we bought a lot of it after the financial crisis we've been very slow in buying things this year because there is so much demand for that asset class right now. So it is tougher pickings for sure in the alternatives, but we still do find some attractive opportunities. 6

You mentioned the Icelandic banks at private placement side. And it tweaked me only because I would have thought that not having any business reason to be in Europe there would be no reason to look at them in the first place anyway. So I mean, can you -- should the general account just track the business and your asset allocation and your geographic breakdown is just where the Company is operated or can it you go wandering off a little bit at least in search of those kind of opportunities? Yes, good question. And absolutely we currency match, so there is no question of that. So these Icelandic banks were borrowing in US dollars coming to the US market. So we are not -- just to be clear, we're not taking any currency risk. But I guess the question is how well -- we don't have people on the ground, we don't have business there, what business do we have investing over in Europe even if they are borrowing in US dollars or Canadian dollars. And I would say the world has become a much smaller place. And there are a lot of companies -- so we do have some exposure to Europe, I think about 5% of the balance sheet is in European largely corporates. And these are largely global institutions whose business -- they may be domiciled in Europe but are doing their business all over the world. And the same is true in the US. We'll lend to US companies that do a lot of business in Europe. So when we invest in Europe they are coming to the US to borrow money and they are borrowing US dollars typically because they have US revenue coming in somewhere else. So there they themselves are trying to currency match. And so, we tend to invest in those companies in Europe really that have businesses that are global, that aren't as focused. So I think it would be hard to invest in a company that solely did business in Germany or France without really having people on the ground there to help evaluate the situation. Okay, so I want to talk a little bit about the AFS gains. Manulife has suggested that there is a core level of AFS gains that we can count on every quarter, but then there is the excess gains that always seem to show up as well. And that was in an era where rates were falling and so it was probably easier to get a lot of those gains. How much of the AFS gains have been rate sensitive? And should we assume that if rates are rising that the ability to book these gains on an ongoing basis is not necessarily as prevalent as it was before? So, I'm not sure how many people understood the question. AFS -- maybe you are all insurance analysts and you understand it. But just to step you back what I think that means is in surplus we categorize most of our investments as available for sale and they don't get mark-to-market and run through the earning statement but they run through the earning statement if we sell them. And so, we have -- in surplus we have a lot of -- it's where actually a bunch of our governments are. And we also have some -- the small amount of public equities we do have for the shareholders account are in surplus. So we have a program of a couple billion dollars of equities in surplus where if we don't sell those and realize the gains over time it doesn't flow-through to earnings. So we have a program of it sort of regularly harvesting a small amount of gains. And those we think are repeatable and will continue. And those are the smaller portion of them. The bigger portion is we have a big and long bond portfolio in surplus and we really use that to offset some of the remainder of the interest rate risk in our liabilities. 7

If you looked at our disclosures last quarter we showed for a 100 basis point drop in rates we would lose CAD500 million through earnings. That happens sort of automatically and that is the mismatch, if you will, in the liabilities. But we also have a long portfolio in surplus that offsets that, but it won't flow-through earnings unless we realize the gains or losses. And so we have had a program of taking gains when rates drop in surplus and losses when rates rise. And last quarter we took losses as rates rose in surplus and we continue to do that. But those we really think is an offset to what is going on in the liabilities, so those -- and those don't get into our core earnings, those really just offset the sensitivity of the liabilities. So is it a difference in kind between what is included in the core numbers and what is included to offset the movement in interest rates or is it just a question of volume, that there is a certain level that we can reproduce with some regularity therefore we will call them core and the rest will end up putting out into the --? It is really the equity stuff that will run through core and the fixed income stuff that runs through investment gains and losses. I want to talk a little bit about the alternative assets (inaudible). And so, you touched on them, but I think investors might -- sometimes don't understand the full suite of things that the company invests in. And why an insurance companies should be in timber assets and oil and gas assets. And so, maybe give a bit of a sense of what that -- I think it was 8%, if I recall, of the portfolio is in these alternative assets. What are they and why does the risk/reward work for a life co? Yes, and it is an area that -- where we are proud of; we think has performed well over time; expect it would going forward. It's not a huge part of the portfolio at 8%, but it definitely provides outsized returns relative to what you can get in fixed income. And it has kind of become the flavor of the day, which actually is a little bit of maybe a problem for us in a couple of ways. We have been -- so really we identify sort of six areas that we are in and we like diversification and everything we do and in this portfolio no different. And so, the biggest chunk is unlevered commercial real estate, which you can get into the details of that if you would like, but in all of these areas this is a riskier end of the spectrum and we tend to stay pretty defensive in all of these areas. So in commercial real estate we tend to like well leased office buildings in the downtown core and cities that are very diverse. That is what our -- and it is unlevered. So that is what our real estate book looks like in North America. That is one category. We are in timber, as you point out, and timber -- it is a little harder to diversify timber. Timber tends to move; altogether the biggest demand for timber is homebuilding. So timber suffered quite a bit in the financial crisis. But has also come back significantly as housing has started to recover. And another one is agriculture. And agriculture was one of those areas that really sort of proved out the diversification thing. In the financial crisis everything seemed to get more correlated. Agriculture, however, had some of its best years in 2009 -- 2008 and 2009, and so it really was a nice diversifier to the portfolio. That is the third one. A fourth one would be infrastructure. And all four of these categories are the type we really like the best. I guess oil and gas, a fifth one. All of these are real assets, they are long-lived assets. We really -- our plan is really to buy these and hold these for a long time and we are backing the long tails 8

of the liabilities so they are a very good fit for that. They're long-duration assets with relatively high return. Yes, you don't have a contracted return but it is a very stable return especially as a portfolio. And in each of those categories we have been investing in them for 20+ years. And some of them we're not just a financial investor but we actually manage the assets. Our oil and gas investments, we own an oil and gas company so we are doing the drilling and so forth. In our timberland we manage all of the Timberland, we have foresters on staff. Farmland is similar. Real estate we manage all the real estate and we develop real estate. And so, you are a much better investor when you are very close to the assets and you manage the assets, so I think that helps us quite a bit. Infrastructure where we actually have a small company that develops renewable energy sources but a big part of the portfolio we are really just a financial investor. And then the sixth category is private equity. And private equity doesn't fit as well, it's an alternative asset but it is not as long a duration, typically you turn that portfolio over, it it's not a real asset, but it adds diversification, has good returns and, again, it is a category we have been investing in for a long time. So the key is to have a diversified portfolio, to have good expertise in managing it and, as I said at the beginning, a bit of a problem has been it has sort of become -- in a low rate environment people have flocked to this asset class which has not been true for us, we haven't changed our stance, we have been investing for a long time. And so, one, any time you have more demand for an asset class the return -- expected returns go down which we don't like so much so we may be slowed, to your point earlier, what is attractive, it is less attractive now than it was. But still pockets where it is attractive. And a second thing is it gets attention of your regulator who says, well, people are moving into these alternative assets, it gets their antenna up and they start to worry about it and it is not as -- we think we can distinguish ourselves from some of the other players who are coming into the market. Given the history we have we can show the history of the return and the deep teams we have. But nonetheless it creates some anxiety on the part of your regulator. Unidentified Audience Member (Inaudible) alternative asset. Real estate did incredibly well (inaudible) are you more a seller or you've still a buyer of real estate (inaudible)? The question is on the attractiveness of real estate given the run that it has had whether you are a seller or a buyer. Yes. Well over 10 years it had a good run, although it depends when you started and when you ended. It had a little bit of a blip there in 2009 where it was pretty painful as the portfolio got marked down significantly. Even though as I talked to the rating agencies about it who worry about your risk assets, our commercial real estate portfolio the cash flows coming off of that over the last five years have been rock solid. Now the values have gone -- went down and they have come back up as the cap rates have changed but, the income coming off of it has just been rock solid. So it has been a good investment class for us. And to your point, after the financial crisis when those valuations came down we did invest a bunch of money into that space it was hard initially as nothing transacted but as markets loosened up we put some good money to work and found it very attractive. Today it is much harder. We are investing much less in that space. We actually are looking at selling a couple of properties. But -- and so at the margin, yes, we are investing less, we're actually doing some selling. But one of the things across our portfolio is that our portfolio is always growing. 9

We've sold these products where premiums -- we can stop selling today any of our products and the premiums just keep coming in, it is the nature of our business model. And so to sort of be even, in North America we have to invest say CAD10 billion to CAD12 billion a year in fixed income and CAD1 billion to CAD2 billion a year in alternatives. And we can't pull back and not buy it all or even be net sellers. I mean we could, but we tend not to behave that way. What we will do is we will move down to the lower end of the range of the amount we are going to buy. And that is what we have been doing this year and in real estate probably more so than all the other asset classes and alternatives where we are buying less or even net selling in certain cases. Okay. So we are at time, but I want one minute if you can on the leasing business and how attractive the leasing assets are that you are bringing on through -- I mean, [Elements] has talked a lot about how attractive it is for Manulife, so maybe Manulife can tell us how attractive it is. Well, I caution that a bit. I think, and we have done business with Element and other leasing companies and there were -- secured by the leases they make, which we like, we love to be secured. But the leasing industry, it is not all been a happy story. There was a period of time when people, including us, lost money on lending into that industry. And so, we are cautious. We think if they deal is well structured, and with Element we have an opportunity -- it is a privately placed deal -- to get in there and create the kind of structure we think protects us. And so we like that, we use it to back our GSE business in Canada, that works very well, we will continue to do that. What I would say is we can only grow that so big because even though it is a diversified set of leases in a certain economic environment they are all going to be highly correlated. And I have no doubt there will be periods of time when we will lose money again in that business. The business cycle will happen. And so, I think we need to be prudent in how much we are going to allocate to that space. Great. And we are well over time. So thank you very much, Scott, for participating in the conference. Thank you. Thank you. DISCLAIMER Thomson Reuters reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. 2013, Thomson Reuters. All Rights Reserved. 5180655-2013-09-23T15:10:42.453 10