CHICAGO--(BUSINESS WIRE)--Fitch Ratings has assigned an 'A-' rating to newly issued Manufacturers Life Insurance Company (MLI) CAD500 million 2.64% fixed/floating subordinated debentures due 2025 (MFC guarantor).
KEY RATING DRIVERS
Proceeds from the issuance will be used for general corporate purposes, including future refinancing requirements. Pro forma financial leverage is estimated at 20.2%, up slightly from 19.3% at Sept. 30, 2014.
Fitch affirmed the ratings of Manulife Financial Corporation (MFC) and its insurance operating subsidiaries with a Stable Outlook on Sept. 4, 2014.
RATING SENSITIVITIES
Key rating triggers for MFC that could lead to a downgrade include:
--Decline in core earnings;
--Elevated charges for actuarial methods and assumptions or experience losses;
--Fixed-charge coverage on a core earnings basis below 5.5x;
--An increase in financial leverage to over 25% or an increase in total leverage to over 35%;
--A sustained drop in the company's risk-adjusted capital position with no plans or ability to rectify. This would include the MCCSR ratio falling below 200%. The ratings on the U.S. insurance subsidiaries could be affected if the U.S. risk-based capital ratio fell below 400%;
--Inability to successfully integrate the Standard Life acquisition.
Key ratings triggers for MFC that could lead to an upgrade include:
--Continued improvement in profitability on both a core earnings and reported net income basis;
--An increase in fixed-charge coverage on a core earnings basis to near 10x;
--Maintaining current capital and earnings sensitivity to interest rate and equity markets;
--A decline in financial leverage to near 20%.
Fitch has assigned the following rating:
The Manufacturers Life Insurance Company
--CAD500 million 2.64% fixed/floating subordinated debentures due 2025 (Manulife Financial Corp. guarantor) 'A-'.
Fitch currently rates the MFC entities as follows:
Manulife Financial Corporation
--Issuer Default Rating (IDR) at 'A';
--CAD550 million medium term notes 5.161% due 2015 at 'A-';
--USD600 million senior notes 3.40% due 2015 at 'A-';
--CAD900 million medium term notes 4.079% due 2015 at 'A-';
--CAD400 million medium term notes 5.505% due 2018 at 'A-';
--CAD600 million medium term notes 7.768% due 2019 at 'A-';
--USD500 million senior notes 4.90% due 2020 at 'A-';
--CAD350 million 4.10% non-cumulative class A, series 1, preferred stock at 'BBB';
--CAD350 million 4.65% non-cumulative class A, series 2, preferred stock at 'BBB';
--CAD300 million 4.50% non-cumulative class A, series 3, preferred stock at 'BBB';
--CAD200 million 4.20% non-cumulative rate reset, preferred class 1, series 3 stock at 'BBB';
--CAD200 million 4.40% non-cumulative rate reset, preferred class 1, series 5 stock at 'BBB';
--CAD250 million 4.60% non-cumulative rate reset, preferred class 1, series 7 stock at 'BBB';
--CAD250 million 4.40% non-cumulative rate reset, preferred class 1, series 9 stock at 'BBB';
--CAD200 million 4% non-cumulative rate reset, preferred class 1, series 11 stock at 'BBB';
--CAD200 million 3.8% non-cumulative rate reset, preferred class 1, series 13 stock at 'BBB';
--CAD200 million 3.90% non-cumulative rate reset, preferred class 1, series 15 stock at 'BBB';
--CAD350 million 3.9% non-cumulative rate reset, preferred class 1, series 17 stock at 'BBB'.
The Manufacturers Investment Corporation
--IDR at 'A';
--Short-term IDR at 'F1';
--Commercial paper at 'F1'.
Manulife Financial Capital Trust II
--CAD1 billion 7.405% MaCS II series 1 at 'A-'.
Manulife Finance, L.P.
--CAD550 million 4.448% fixed/floating senior debentures due 2026 (Manulife Financial Corp. guarantor) at 'A-';
--CAD650 million 5.059% fixed/floating subordinated debentures due 2041 (Manulife Financial Corp. guarantor) at 'BBB+'.
The Manufacturers Life Insurance Company
--Insurer Financial Strength (IFS) at 'AA-';
--IDR at 'A+';
--CAD550 million 4.21% fixed/floating subordinated debentures due 2021 (Manulife Financial Corp. guarantor) at 'A-';
--CAD500 million 4.165% fixed/floating subordinated debentures due 2022 (Manulife Financial Corp. guarantor) at 'A-';
--CAD200 million 2.819% fixed/floating subordinated debentures due 2023 (Manulife Financial Corp. guarantor) at 'A-';
--CAD250 million 2.926% fixed/floating subordinated debentures due 2023 (Manulife Financial Corp. guarantor) at 'A-';
--CAD500 million 2.811% fixed/floating subordinated debentures due 2024 (Manulife Financial Corp. guarantor) at 'A-'.
John Hancock Life Insurance Co (U.S.A.)
--IFS at 'AA-';
--IDR at 'A+';
--USD450 million surplus notes 7.375% due 2024 at 'A'.
The John Hancock Life Insurance Company of New York
--IFS at 'AA-'.
John Hancock Life & Health Insurance Company
--IFS at 'AA-'.
John Hancock Global Funding II
--Global MTN program at 'AA-'.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (Sept. 9, 2014)
Applicable Criteria and Related Research:
Insurance Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=756650
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=938915
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