OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has assigned a debt rating of “bbb” to the recently issued CAD 200 million, 4.0% non-cumulative rate reset Class 1 shares Series 11 of Manulife Financial Corporation (MFC) (Toronto, Canada). This offering is a five-year rate reset perpetual preferred share issued at CAD 25 per share. The outlook assigned to the rating is stable.
The proceeds from the offering will be utilized for general corporate purposes by MFC, including refinancing of maturing debt and investments in its subsidiaries. With the issuance of the preferred shares, A.M. Best notes that MFC’s existing financial leverage remains temporarily elevated and is expected to decline following forthcoming debt maturities in 2013. However, MFC’s financial leverage remains within the range that supports its current ratings.
The company reported net losses in its third quarter 2012 International Financial Reporting Standards’ financial results due to a large CAD 1 billion charge related to its annual review of actuarial assumptions and a $200 million goodwill write-off. Despite the loss during the quarter, earnings remain modestly positive on a year-to-date 2012 basis.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Insurance Holding Company and Debt Ratings” and “Equity Credit for Hybrid Securities.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology
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