AM Best confirms the credit ratings of Manulife Financial Corporation and its subsidiaries

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OLDWICK, NJ–(BUSINESS WIRE)–AM Best affirmed the financial strength rating (FSR) of A+ (Superior) and the long-term issuer credit rating (Long-term ICR) of “aa-” (Superior) of the life/health insurance subsidiaries ( L/H) from Manulife Financial Corporation (MFC) (Toronto, Canada) [NYSE: MFC]. At the same time, AM Best affirmed MFC’s long-term ICR of “a-” (Excellent) and long-term issue credit ratings (long-term IR). The outlook for these Credit Ratings (ratings) is stable. (See below for a detailed list of companies and ratings.)

The ratings of MFC’s L/H subsidiaries reflect the strength of their balance sheets, which AM Best rates as very strong, as well as their strong operating performance, favorable business profile and very strong enterprise risk management.

MFC continues to maintain a very strong balance sheet despite an ongoing global pandemic that has caused economic stress and increased insurance and investment pressures. MFC’s balance sheet strength rating is indicative of its strong capital position as measured by the Life Insurance Capital Adequacy Test (LICAT) and Best Capital Adequacy Ratio (BCAR) ; MFC’s LICAT score remains higher than its peers and its BCAR remains in the strong category. Throughout 2021, MFC continued to focus on de-risking its balance sheet by offloading lines of business under significant capital pressure while simultaneously developing lines of business that are more efficient in terms of capital. From an operating performance perspective, MFC delivered a significant year-over-year increase in base earnings to $6.5 billion for year-end 2021. The return on equity of MFC base in 2021 was 13%. Earnings reflect MFC’s diversified business model, which includes a robust product offering, geographic diversification in Asia, Canada and the United States, and a strong market presence, with MFC being a leading insurer and occupying leading positions in the market. The company’s ERM program, which has been rated as very strong, supports MFC’s risks in its balance sheet, operational performance and corporate profile.

AM Best’s view of MFC’s legacy activity blocks partially offsets the above factors. AM Best remains somewhat concerned about MFC’s exposure to its legacy businesses – including long-term care and universal life insurance with secondary guarantees – but AM Best notes MFC’s actions to reduce risk and its practices of conservative provisioning. Additionally, the portfolio of long-duration alternative assets performed well in 2021, improving investment returns and providing diversity, but remains high relative to industry averages and may contribute to earnings volatility.

The FSR of A+ (Superior) and the long-term KPIs of “aa-” (Superior) have been confirmed with a stable outlook for the following L/H subsidiaries of Manulife Financial Corporation:

  • The Manufacturers Life Insurance Company

  • John Hancock Life Insurance Company (USA)

  • John Hancock Life Insurance Company of New York

  • John Hancock Life & Health Insurance Company

The following long-term IRs have been confirmed with a stable outlook:

Manulife Financial Corporation-

— “a-” (Excellent) on USD 1.0 billion 4.15% senior unsecured fixed rate, due 2026

— “a-” (Excellent) on USD 500 million 2.484% senior unsecured fixed rate, maturity 2027

— “a-” (Excellent) on $750 million 3.703% senior unsecured notes, due 2032

— “a-” (Excellent) on USD 750 million 5.375% senior unsecured fixed rate, maturity 2046

— “a-” (Excellent) on USD 1.155 billion 3.05% senior unsecured fixed rate, maturity 2060

— “bbb+” (good) on CAD 600 million 3.317% subordinated debentures, due 2028

— “bbb+” (good) on CAD 750 million 3.049% subordinated debentures, due 2029

— “bbb+” (good) on 3.0% subordinated debentures of SGD 500 million, maturing in 2029

— “bbb+” (good) on CAD 1 billion 2.237% subordinated debentures, due 2030

— “bbb+” (good) on $750 million of 4.061% subordinated debentures, due 2032

— “bbb+” (good) on CAD 1 billion 2.818% subordinated debentures, due 2035

— “bbb+” (bond) on C$2 billion 3.375% Limited Recourse Capital Notes, due 2081

— “bbb+” (bond) on C$1.2 billion 4.1% Limited Recourse Capital Notes, due 2082

— “bbb+” (bond) on C$1 billion 7.117% Limited Recourse Capital Notes, due 2082

— “bbb” (good) on CAD 350 million Non-Cumulative Class A Preference Shares, Series 2 at 4.65%

— “bbb” (good) on CAD 300 million 4.5% Class A Non-Cumulative Preference Shares, Series 3

— “bbb” (good) on CAD 158.4 million 2.178% Class 1 Non-Cumulative Preference Shares Series 3

— “bbb” (good) on CAD 250 million 4.351% Class 1 Non-Cumulative Preference Shares, Series 9

— “bbb” (good) on CAD 200 million 4.731% Class 1 Non-Cumulative Preference Shares, Series 11

— “bbb” (Good) on CAD 200 million 4.414 Class 1 Non-Cumulative Preference Shares, Series 13

— “bbb” (Good) on CAD 200 million 3,786 Class 1 Non-Cumulative Preference Shares, Series 15

— “bbb” (good) on CAD 350 million Class 1 Non-Cumulative Preference Shares, Series 17 at 3.9%

— “bbb” (good) on CAD 250 million Class 1 Non-Cumulative Preference Shares, Series 19 at 3.8%

— “bbb” (good) on CAD 250 million 4.70% Class 1 Non-Cumulative Preference Shares, Series 25

— “bbb” (Good) on CAD 41.6 million Non-Cumulative Class 1 Preference Shares, Series 4 Floating Rate

The Manufacturers Life Insurance Company

— “a” (Excellent) on C$1.0 billion 3.181% subordinated debentures, due 2027

Manulife Finance (Delaware), LP—

— “bbb+” (good) on CAD 650 million 5.059% subordinated debentures, due 2041

John Hancock Life Insurance Company (USA)—

— “a” (Excellent) on $450 million 7.375% Excess Notes, Due 2024 (formerly issued by John Hancock Life Insurance Company)

— “a+” (Excellent) on all outstanding notes issued under the John Hancock Signature Notes program (formerly issued by John Hancock Life Insurance Company)

The following indicative long-term IRs under pre-registration have been confirmed with a stable outlook:

Manulife Financial Corporation—

— “a-” (Excellent) on senior unsecured debt

— “bbb+” (good) subordinated debt

— “bbb” (good) on preferred stock

This press release relates to credit ratings that have been published on AM Best’s website. For all rating information relating to the publication and relevant disclosures, including office details responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Ratings, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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