AM Best Affirms Credit Ratings of Manulife Financial Corporation and Its Subsidiaries
The ratings of MFC’s L/H subsidiaries reflect their balance sheet strength, which AM Best assesses as very strong, as well as their strong operating performance, favorable business profile and very strong enterprise risk management.
MFC maintains a very strong balance sheet strength assessment despite ongoing global market and economic volatility and increased investment-related pressures. MFC’s balance sheet strength assessment is indicative of its strong capital position, as measured by the Life Insurance Capital Adequacy Test (LICAT) and Best’s Capital Adequacy Ratio (BCAR); MFC’s LICAT score remains at or above that of its peers and its BCAR remains within the strong category. MFC maintains a moderate level of financial leverage and strong interest coverage, which remain well within the guidelines for its current ratings. MFC’s BCAR is expected to remain strong despite accounting changes related to the adoption of IFRS 17, which has impacted the level of shareholder equity negatively, primarily due to changes in accounting geography. While MFC’s financial leverage also will increase modestly under the new accounting rules, it is expected to remain well within AM Best guidelines.
MFC’s stable balance sheet also can be attributable to its focus on de-risking its balance sheet by offloading business lines with significant capital strain while simultaneously growing more capital-efficient lines of business. From an operating performance perspective, MFC continues to report favorable earnings in its core lines of business despite some fluctuations due to market conditions. MFC’s earnings are reflective of its diverse business model, which includes a robust product offering, geographic diversification throughout
Partially offsetting the aforementioned factors is MFC’s exposure to its legacy blocks of business, including long-term care and universal life with secondary guarantees, which comprise a significant amount of the company’s overall reserves. AM Best notes MFC’s prudent management of these blocks of business through loss prevention initiatives and conservative reserving practices. While the alternative long-duration asset portfolio has exhibited some volatility, the portfolio has demonstrated a favorable historical track record and generally has enhanced MFC’s investment yield while providing investment diversity. However, it does remain elevated compared with industry averages and may contribute to earnings volatility.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with stable outlooks for the following L/H subsidiaries of Manulife Financial Corporation:
- The Manufacturers Life Insurance Company
-
John Hancock Life Insurance Company (
U.S.A. ) -
John Hancock Life Insurance Company of
New York - John Hancock Life & Health Insurance Company
The following Long-Term IR has been assigned with a stable outlook:
Manulife Financial Corporation—
-- “bbb+” (Good) on
The following Long-Term IRs have been affirmed with stable outlooks:
Manulife Financial Corporation—
-- “a-” (Excellent) on
-- “a-” (Excellent) on
-- “a-” (Excellent on
-- “a-” (Excellent) on
-- “a-” (Excellent) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
-- “bbb” (Good) on
Manulife Finance (
-- “bbb+” (Good) on
John Hancock Life Insurance Company (
-- “a” (Excellent) on
-- “a+” (Excellent) on all outstanding notes issued under the program John Hancock Signature Notes (formerly issued by John Hancock Life Insurance Company)
The following indicative Long-Term IRs under the shelf registration have been affirmed with stable outlooks:
Manulife Financial Corporation—
-- “a-” (Excellent) on senior unsecured debt
-- “bbb+” (Good) subordinated debt
-- “bbb” (Good) on preferred stock
This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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Michael Adams
Associate Director
+1 908 882 1592
michael.adams@ambest.com
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com
Michael Porcelli
Senior Director
+1 908 882 2250
michael.porcelli@ambest.com
Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
al.slavin@ambest.com
Source: AM Best