Additional Actuarial Disclosures Source of Earnings Manulife uses a Source of Earnings (“SOE”) to identify the primary sources of gains or losses in each reporting period. It is one of the key tools the Company uses to understand and manage its business. The SOE is prepared following OSFI’s regulatory guidelines, and in accordance with educational notes published by the Canadian Institute of Actuaries (“CIA”). The SOE attributes each component of earnings to one of ten categories: expected profit from in-force business, the impact of new business, experience gains or losses (comparing actual to expected outcomes), the impact of management actions and changes in assumptions, earnings on surplus funds, other insurance earnings, Global Wealth and Asset Management earnings, Manulife Bank earnings, unallocated overhead expenses, and income taxes. In aggregate, these elements explain the $7,294 million of net income attributed to shareholders in 2022. Each of these ten categories is described below: Expectedprofitfromin-forcebusinessrepresents the formula-driven release of Provisions for Adverse Deviation (“PfADs”) on non-fee income insurance businesses, the expected net income on fee businesses, and the planned margins on one-year renewable businesses such as Group Benefits. PfADs are a requirement of the Canadian Actuarial Standards of Practice, and represent additional amounts held in excess of the expected cost of discharging policy obligations in order to provide a margin of conservatism. These amounts are released over time as the Company is released from the risks associated with the policy obligations. The increase in 2022 over 2021 was driven by in-force business growth in Asia and Canada, partially offset by lower in-force earnings in U.S. Annuities related to the two transactions to reinsure over 80% of the Company’s U.S. variable annuity block in 2022. Impactofnewbusinessrepresents the financial impact of new business written in the period, including acquisition expenses. Writing new business creates economic value, which is offset by PfADs and other limits on capitalization of this economic value in actuarial liabilities. The new business gain in 2022 declined compared to 2021, driven by Asia and the U.S. Experiencegainsorlossesarise from items such as claims, policy persistency, fee income, and expenses, where the actual experience in the current period differs from the expected results assumed in the insurance and investment contract liabilities. It also includes experience gains or losses associated with actual investment returns and movements in investment markets differing from those expected on assets supporting insurance and investment contract liabilities. For most businesses, the expected future investment returns underlying policy valuations are updated quarterly for investment market movements and this impact is also included in experience gains and losses. This component also includes the impact of currency changes to the extent they are separately quantified. Experience gains do not include the impact of management actions or changes in assumptions during the reporting period, which are reported in “Management actions and changes in assumptions”. The experience gains in 2022 were driven by favourable investment related experience on general fund liabilities, partially offset by the unfavourable equity market performance, as well as unfavourable policyholder experience. The favourable investment related experience on general fund liabilities reflected the favourable impact of fixed income reinvestment activities, strong credit experience and higher-than- expected returns (including fair value changes) on alternative long duration assets (“ALDA”) primarily driven by private equity, infrastructure, and timberland, partially offset by real estate. The favourable impact of fixed income reinvestment was primarily due to the increase in risk-free interest rates and the overall flattening of the yield curve in the U.S. and Canada. The experience gains were partially offset by net charge related to gross equity exposure and dynamic hedge experience, unfavourable policyholder experience mainly in the U.S., China and Vietnam, as well as a charge in the P&C Reinsurance business. The experience gains in 2021 were primarily driven by favourable investment related experience on general fund liabilities and favourable impact from gross equity markets exposure, partially offset by the unfavourable impact from interest rate movements, a net charge related to the impact of updated ultimate reinvestment rate (“URR”) assumptions issued by the Canadian Actuarial Standards Board (“ASB”), as well as unfavourable policyholder experience. The favourable investment related experience on general fund liabilities was driven by higher-than-expected returns (including fair value changes) on alternative long-duration assets (“ALDA”) primarily driven by gains on private equity and infrastructure, strong credit experience, and the favourable impact of fixed income reinvestment activities. The unfavourable impact of interest rate movements was primarily due to the increase in risk-free interest rates and the overall steepening of the yield curve in U.S. and Canada. The experience gains were partially offset by a charge in the P&C Reinsurance business for losses related to Hurricane Ida and the European floods. Managementactionsandchangesinassumptionsreflect the income impact of changes to valuation methods and assumptions for insurance and investment contract liabilities and other management-initiated actions in the year that are outside the normal course of business. The 2022 pre-tax earnings impact of changes in methods and assumptions was a $41 million gain compared to a $128 million charge in 2021. The $41 million gain in 2022 included a comprehensive study of the Company’s U.S. LTC experience, including all aspects of claims assumptions and future premium rate increases. Other assumptions reviewed included mortality and certain lapse assumptions for Canada’s life insurance business, as well as lapse and mortality assumptions for certain Asia markets. Note 7 of the Consolidated Financial Statements provides additional detail on the changes in actuarial methods and assumptions. 230 | 2022AnnualReport | AdditionalActuarialDisclosures