AM Best Affirms Credit Ratings of Manulife Financial Corporation and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of the life/health (L/H) insurance subsidiaries of Manulife Financial Corporation (MFC) (Toronto, Canada) [NYSE: MFC]. Concurrently, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IR) of MFC. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and ratings.)

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 continues to maintain a very strong balance sheet despite an ongoing global pandemic that has caused economic strain and increased insurance and 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 above that of its peers and its BCAR remains within the strong category. Throughout 2021, MFC maintained 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 reported a significant year-over-year increase in core earnings with $6.5 billion for year-end 2021. MFC’s core return on equity in 2021 was 13%. Earnings are reflective of MFC’s diverse business model, which includes a robust product offering, geographic diversification throughout Asia, Canada and the United States, and strong market presence with MFC being a top-ranked insurer and holding leading market positions. The company’s ERM program, which has been assessed as very strong, supports MFC’s risks within its balance sheet, operating performance and business profile.  

Partially offsetting the aforementioned factors is AM Best’s view of MFC’s legacy blocks of business. AM Best remains somewhat concerned with MFC’s exposure to its legacy businesses – including long-term care and universal life with secondary guarantees – but, AM Best notes MFC’s actions to de-risk and its conservative reserving practices. In addition, the alternative long duration asset portfolio performed well in 2021 enhancing investment yield and providing diversity but it remains 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 IRs have been affirmed with stable outlooks:

Manulife Financial Corporation-

— “a-” (Excellent) on USD 1.0 billion 4.15% senior unsecured fixed rate, due 2026

— “a-” (Excellent) on USD 500 million 2.484% senior unsecured fixed rate, due 2027

— “a-” (Excellent) on USD 750 million 3.703% senior unsecured notes, due 2032

— “a-” (Excellent) on USD 750 million 5.375% senior unsecured fixed rate, due 2046

— “a-” (Excellent) on USD 1.155 billion 3.05% senior unsecured fixed rate, due 2060

— “bbb+” (Good) on CAD 600 million 3.317% subordinated debentures, due 2028

— “bbb+” (Good) on CAD 750 million 3.049% subordinated debentures, due 2029

— “bbb+” (Good) on SGD 500 million 3.0% subordinated debentures, due 2029

— “bbb+” (Good) on CAD 1 billion 2.237% subordinated debentures, due 2030

— “bbb+” (Good) on USD 750 million 4.061% subordinated debentures, due 2032

— “bbb+” (Good) on CAD 1 billion 2.818% subordinated debentures, due 2035

— “bbb+” (Good) on CAD 2 billion 3.375% limited recourse capital notes, due 2081

— “bbb+” (Good) on CAD 1.2 billion 4.1% limited recourse capital notes, due 2082

— “bbb+” (Good) on CAD 1 billion 7.117% limited recourse capital notes, due 2082

— “bbb” (Good) on CAD 350 million 4.65% non-cumulative Class A Series 2 preferred shares

— “bbb” (Good) on CAD 300 million 4.5% non-cumulative Class A Series 3 preferred shares

— “bbb” (Good) on CAD 158.4 million 2.178% non-cumulative Class 1 Series 3 preferred shares

— “bbb” (Good) on CAD 250 million 4.351% non-cumulative Class 1 Series 9 preferred shares

— “bbb” (Good) on CAD 200 million 4.731% non-cumulative Class 1 Series 11 preferred shares

— “bbb” (Good) on CAD 200 million 4.414 non-cumulative Class 1 Series 13 preferred shares

— “bbb” (Good) on CAD 200 million 3.786 non-cumulative Class 1 Series 15 preferred shares

— “bbb” (Good) on CAD 350 million 3.9% non-cumulative Class 1 Series 17 preferred shares

— “bbb” (Good) on CAD 250 million 3.8% non-cumulative Class 1 Series 19 preferred shares

— “bbb” (Good) on CAD 250 million 4.70% non-cumulative Class 1 Series 25 preferred shares

— “bbb” (Good) on CAD 41.6 million variable rate non-cumulative Class 1 Series 4 preferred shares

The Manufacturers Life Insurance Company

— “a” (Excellent) on CAD 1.0 billion 3.181% subordinated debentures, due 2027

Manulife Finance (Delaware), L.P.—

— “bbb+” (Good) on CAD 650 million 5.059% subordinated debentures, due 2041

John Hancock Life Insurance Company (U.S.A.)—

— “a” (Excellent) on USD 450 million 7.375% surplus notes, due 2024 (formerly issued by John Hancock Life Insurance Company)

— “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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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