OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned an issue rating of “bbb+” to the recently issued Singapore Dollar 500 million 3.85% subordinated notes due May 25, 2026 of Manulife Financial Corporation (MFC) (Toronto, Canada) [NYSE:MFC]. The outlook assigned to the rating is stable.
The proceeds from the offering will be utilized for general corporate purposes. MFC may redeem the debentures on or after May 25, 2021. With the issuance of the subordinated notes, A.M. Best notes that MFC’s existing financial leverage is temporarily elevated but is expected to decline should the company elect to redeem callable debt later in 2016. Despite the new issuance, MFC’s financial leverage remains within the range that supports the company’s current ratings.
MFC reported net income attributed to shareholders of CAD 2,191 million for year-end 2015, based on International Financial Reporting Standards. Positive financial results for the first quarter 2016 of CAD 1,045 million were due to solid core earnings, and growth in the company’s asset management business globally, partly mitigated by investment-related experience charges. Mutual fund assets have continued to grow as MFC focuses its growth on high return and lower risk business. Despite the use of hedging to mitigate earnings volatility, A.M. Best believes the company’s large book of interest and equity market sensitive in-force business will remain a challenge due to the continued low interest rate environment.
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