OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a debt rating of “a” to the recently issued CAD 750 million, 2.10% aggregate principal fixed/floating subordinated debentures due June 1, 2025 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. MLI may redeem the debentures on or after June 1, 2020. 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 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 attributed to shareholders of CAD 3,501 million in its year-end 2014 International Financial Reporting Standards’ financial results due to solid core earnings, which included growth in the company’s asset management business globally and record insurance sales in Asia. Mutual fund assets have continued to grow as MFC focuses its growth on high return and lower risk businesses. MFC continues to build on its Canadian business with the completed acquisition of the Canadian based operations of Standard Life plc effective Jan. 30, 2015. 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.