A.M. Best Assigns Debt Rating to The Manufacturers Life Insurance Company’s New Subordinated Debt Offering

OLDWICK, N.J.--()--A.M. Best has assigned a debt rating of “a” to the recently issued CAD 350 million 2.389% fixed/floating subordinated debentures due Jan. 5, 2026 of The Manufacturers Life Insurance Company (MLI) (Toronto, Canada). The outlook assigned to the rating is stable.

The proceeds from the offering will be utilized for general corporate purposes including future refinancing requirements. Subject to regulatory approval, MLI may redeem the debentures on or after Jan. 5, 2021. The debentures are fully and unconditionally guaranteed on a subordinated basis by the holding company, Manulife Financial Corporation (MFC). With the issuance of the subordinated debentures, A.M. Best notes that MFC’s existing financial leverage remains temporarily elevated but is expected to decline following scheduled debt maturities and redemptions in 2015. Despite the new issuance, MFC’s financial leverage has been decreasing due to capital growth and remains within the range that supports its current ratings.

MFC reported net income of CAD 723 million in its first quarter 2015 International Financial Reporting Standards’ financial results due to strong core earnings, growth in the company’s asset management business globally, continued very strong insurance sales in Asia and solid life insurance sales partly driven by product enhancements in the United States and improved competitive positioning in large case group benefits in Canada. MFC’s earnings for the quarter also benefitted from the Jan. 30, 2015 completed acquisition of the Canada-based operations of Standard Life plc. Despite the use of hedging to mitigate earnings volatility, A.M. Best believes that managing the company’s large book of interest and equity market sensitive in-force business will continue to remain a challenge due to the current macroeconomic environment and continued low interest rates in its key markets.

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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

  • Equity Credit for Hybrid Securities
  • Analyzing Insurance Holding Company Liquidity
  • Insurance Holding Company and Debt Ratings

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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best Company
Edward Kohlberg
Senior Financial Analyst
(908) 439-2200, ext. 5664
edward.kohlberg@ambest.com
or
Stephen Irwin
Vice President
(908) 439-2200, ext. 5454
stephen.irwin@ambest.com
or
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

Contacts

A.M. Best Company
Edward Kohlberg
Senior Financial Analyst
(908) 439-2200, ext. 5664
edward.kohlberg@ambest.com
or
Stephen Irwin
Vice President
(908) 439-2200, ext. 5454
stephen.irwin@ambest.com
or
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com