1. Navigating large case capacity
Insurance products are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY Insurance policies and/or associated riders and features may not be available in all states
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LIFE-1459

2. Overview
Navigating the complexities associated with large cases can be challenging, but John Hancock has the expertise, reinsurance capacity outlets and large internal retention capacity to be successful in this market
Let us help you be successful with these large cases, by sharing some insight and tips on how to best approach the market with these opportunities

3. Getting started: Terms and definitions
Direct (Insurance) company (aka “ceding company” or “direct carrier”)– the company that underwrites and issues the policy directly to the end consumer to address the insurance needs (ex. John Hancock, Lincoln etc.)
Reinsurer An insurance company that insures the risks of the direct company. Generally, a direct insurance company will establish a pool of reinsurers which participate on each life to provide the maximum amount of capacity and risk sharing. Contracts (treaties) are established between the direct company and Reinsurer to agree on general approaches to assessing the risks that are shared.
Retrocessionaire A reinsurance company that insures the reinsurer. Reinsurance companies cede risks to retrocessionaires in order to reduce their net liability on individual risks. Retrocessionaires do not deal directly with direct companies.
Note:
All 3 entities exist in order to help spread the risk thus avoiding catastrophic losses, enabling them to maintain their financial stability, and to obtain additional underwriting capacity

4. Definitions (cont’d) Retention
The maximum amount of coverage that the direct company will retain within “it’s walls”
John Hancock utilizes reinsurance pools to spread the risk and increase the total coverage we can offer to each insured, contributing a portion of it’s available retention to each case. In cases where there is no reinsurance coverage available, John Hancock will consider covering the entire case with it’s available retention
Individual Coverage
Survivorship Coverage
Age
Face Amount
Both Lives
0-70
$30,000,000
20-70
$35,000,000
71-75
$25,000,000
76-80
$20,000,000
81-85
$10,000,000
$12,500,000
86-90
$7,500,000
Jumbo, Automatic Binding and Retention Limits may vary by product and be reduced by age, mortality assessment, for aviation risks, and juveniles. Coverage may be reduced or not available for foreign risks and sports figures.
Applications containing Return of Premium Rider or other increasing features must satisfy John Hancock’s Automatic Binding and Jumbo Limits based on ultimate death benefit amount. Underwriting requirements are based on the ultimate death benefit amount.
Represents maximum potential retention for Standard or better lives.

5. Definitions (cont’d) Automatic binding capacity
The authority for a direct company to automatically share (cede) coverage to a reinsurer with no underwriting by the reinsurer
Auto Limits/practices are defined by the treaties and follow the direct company’s underwriting guidelines, manuals and procedures.
All cases include a Jumbo clause which can cap the ability to participate “automatically”
Permanent Products – Autobinding Limits
Age
Face Amount
0-75
$65,000,000
20-75
76-80
$55,000,000
$60,000,000
81-85
$27,500,000
$30,000,000
86-90
$7,500,000
$10,000,000
Individual Coverage
Survivorship Coverage
18-75
71-75
$50,000,000
$38,000,000
Term Products – Automatic Binding Limits
These automatic binding limits include the reinsurer’s share plus John Hancock’s share (our retention amount)

6. N/A (limited to Retention only)
Definitions (cont’d)
Age
Product
Face Amount
0-80
All Product – Individual and Survivorship
$65,000,000
81-85
Permanent Products Only – Individual and Survivorship
$50,000,000
86-90
N/A (limited to Retention only)
Jumbo limits:
The maximum amount of coverage that can be inforce and pending on an insured to consider participation in an automatic reinsurance pool
Typical jumbo limit is $65M
All business must be considered, it includes any formal pending apps and all inforce coverage (including policies that have been settled or sold or will be replaced)
It excludes policies that will be 1035’d or replaced with absolute assignment to John Hancock
Example 1:
Insured has $40M inforce – issued 3 years ago, planning to replace $10 Million
Insured settled a $7M Lincoln policy 10 years ago
Insured applying for $20M
Jumbo is violated, no automatic reinsurance capacity available ($40M+ $7M+$20M) >$65M
Example 2:
Insured has $40M inforce – issued 3 years ago, planning to 1035 or replace $10M of this with an absolute assignment to John Hancock
Insured settled a $7 Prudential policy 15 years ago
Insured applying for $20M
Jumbo limit is met, automatic reinsurance capacity available ($40M (-$10) +$7M+$20M) <$65M

7. Managing Jumbo limit (cont’d)
Consequences to John Hancock when Jumbo is exceeded at the time of issue can be significant
We may find we have no reinsurance support and be liable for the entire amount
A policy may be rescinded if there was misrepresentation in the amounts inforce and applied for at time of application

8. Definitions (cont’d) Or Facultative reinsurance
Facultative reinsurance arrangements can be pursued when:
A case exceeds JUMBO or automatic reinsurance capacity limits
The direct company feels the reinsurer may be able to improve the underwriting offer or offer additional capacity Or
Facultative arrangements are usually on a per policy agreement and require the reinsurer to review the papers and underwrite the case
John Hancock has many outlets to pursue facultative coverage if needed, however, JH also has access to a Jumbo + facultative offering

9. Definitions (cont’d) Excess Facultative Capacity
Some carriers have access to facultative capacity that is “reserved” for their exclusive use on first come, first serve basis
1. Super Pool = Lincoln & Prudential
2. Jumbo Plus = John Hancock
Capacity of approx. $30M+
Facultative review required
This additional capacity can be tapped to top-up amounts over and above the automatic limits
Facultative review required

10. Tips to manage expectations
Factors that will influence the amount of coverage that can be written:
Age of the insured
Amount applied for and inforce, including pending formal applications, to be replaced and settled policies
Medical and non-medical risk factors of the insured
Jumbo limit
John Hancock autobind & internal retention limits
Note
Maximum potential capacity reinsurance & retention combined is based on standard or better lives
Survivorship coverage limits are determined based on the age and risk class of the life with the better underwriting decision
Underwriting requirements are based on age nearest and ultimate death benefit applied for

11. Tips to manage expectations
Reductions/exceptions: To published automatic reinsurance and retention limits may apply in the following scenarios:
Products not subject to traditional underwriting: ex. Smart Protect, Coli, etc.
Older ages, rated cases, lifestyle risks (ex. Aviation, foreign travel) and juveniles
Non-U.S. residency
Foreign risks, entertainers and sports figures
Applications with return of premium rider or other increasing features (the ultimate face amount is considered when determining if they fit within the automatic and jumbo limits)
Note John Hancock’s M Proprietary products (have their own reinsurance agreements and capacity schedules)

12. Tips to manage expectations
Always consult with large case underwriter when seeking large amounts of coverage that may be in excess of our automatic and/or jumbo limits
The underwriter will discuss the best strategy for maximizing the amount of coverage available in the most streamlined fashion
Choosing a lead carrier to navigate the reinsurance market is key
A carrier with large retention, automatic pool and fac outlets like JH will have the most success in piecing together cases as large as $100M
Let’s look at some examples…

13. Case study 1 How is this handled?
Female 55, looking for $75,000,000 UL
Would like to apply formally to John Hancock
$5,000,000 inforce, no replacement
No other formal applications pending
Medically she is a Super Preferred risk.
There are no aviation, avocation, or travel concerns.
How is this handled?

14. Case study 1 (cont’d) Approach
First, we take advantage of the available automatic binding limit and issue coverage up to Jumbo, in this case $60,000,000
Once that policy is paid and inforce we can then address the remaining $15,000,000
Since John Hancock has no other inforce coverage, our available internal retention combined with facultative capacity we can support the $15,000,000 and we can go to issue to complete the total line of $75,000,000 with no additional underwriting requirements

15. Case study 2 How is this handled?
Female 74, looking for $60,000,000 UL
$40MM in force with another carrier that will be replaced
Medically Standard risk
No aviation, avocation or travel concerns
How is this handled?

16. Case study 2 (cont’d) Approach
The amount applied and inforce exceeds the Jumbo limit, however, there are plans to replace some of the coverage
In order to keep the Jumbo limit intact, the inforce replacement must be via an Absolute Assignment of that policy to John Hancock. From there, we can control the replacement/surrender with the other carrier*
Without the Absolute Assignment, the inforce policy must be included in the Jumbo calculation causing a breach of the Jumbo Limit. At that point, the only options to consider would be determining if John Hancock internal retention is available and/or seek facultative coverage
*If the inforce policy has an existing assignment, it cannot be assigned a second time and that policy would have to be included in the Jumbo calculation

17. Case study 3 How is this handled?
John Hancock recently issued $65,000,000 UL on a 61 year old male
Now requesting as much additional coverage as possible
How is this handled?

18. Case study 3 (cont’d) Approach
Since we are at Jumbo limit of $65M, the only options are pursuing the balance of our internal retention combined with facultative reinsurance coverage
Hancock could potentially issue an additional policy of $40M providing a total line of $105M of coverage to this insured with a combination of top up coverage from our internal retention and excess facultative coverage

19. Visit our microsite to learn more about how we are raising the service bar for your large cases or call us at , option 2.