A.M. Best Affirms Ratings of Manulife Financial Corporation and Its Subsidiaries and Assigns Issue Ratings
March 12, 2016 by Best's News Service
Oldwick – A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of the life/health subsidiaries of Manulife Financial Corporation (MFC) (Toronto, Canada) [NYSE: MFC]. Additionally, A.M. Best has affirmed the ICR of “a-”, assigned issue ratings and affirmed the existing issue ratings of MFC. Concurrently, A.M. Best has withdrawn the ICR of “aa-” for John Hancock Global Funding II and all issues related to this program. The outlook for all ratings is stable. (See link below for a detailed listing of the companies and issue ratings.)
The rating affirmations reflect MFC’s solid risk-adjusted capitalization, strong liquidity profile and very strong growth and corresponding increased scale within its core business lines, particularly within Asia and its global wealth asset management (WAM) business segment. The company’s strategy in recent years has led to a focus on less capital-intensive lines of business while growing its WAM business segment and concurrently expanding its geographical footprint into selective high growth markets in Asia. The ratings also reflect significant acquisitions and strategic partnerships made during the past year in North America and Asia, which coupled with organic growth, have resulted in a significant increase in assets under management and administration. A.M. Best believes that these transactions will help to support MFC’s growing global market position, specifically in Asia and in the WAM business segment.
Offsetting rating factors include MFC’s heightened investment risk relative to capital primarily from energy investments that could result in additional market-to-market exposure and/or potential impairments. MFC also has a high exposure to real estate-linked assets through commercial mortgage loans, alternative assets and directly owned real estate. MFC retains a large block of variable annuities that despite strong risk management practices, including a significant hedging program, remains subject to equity market volatility, future policyholder annuitization election rates and interest rate risk. While the company has initiated rate increases and additional reserves related to its long-term care (LTC) business, A.M. Best remains concerned over MFC’s LTC book of business, currently written through John Hancock Life Insurance Company (U.S.A.). Additionally, MFC faces an evolving regulatory framework in Canada that is to come into effect in 2018. Finally, MFC’s leverage will be temporarily elevated and above the company’s targeted level due to recent pre-financing activities.
For a complete list of Manulife Financial Corporation and its subsidiaries’ FSRs, ICRs and issue ratings, please visitManulife.
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activityweb page.
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BN-NJ-3-11-2016 1607 ET #
