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FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 20, 2015 03:03 PM (EST)
A.M. Best has assigned an issue rating of “a” to the recently issued CAD 1.0 billion 3.181% fixed/floating subordinated debentures due Nov. 22, 2027 of Manulife Financial Corporation’s (MFC) subsidiary, 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 Nov. 22, 2022. The debentures are fully and unconditionally guaranteed on a subordinated basis by the holding company, MFC.
With the issuance of the subordinated debentures, A.M. Best notes that MFC’s existing financial leverage is temporarily elevated until future debt redemptions take place. Despite the new issuance, MFC’s financial leverage remains within the range that supports the company’s current ratings.
MFC reported net income of CAD 672 million in its third quarter of 2015 based on International Financial Reporting Standards. The positive financial results for the quarter were due to strong core earnings, and net gains from the direct impact of equity markets and interest rates, tempered by unfavorable oil and gas investments, and net charges related to changes in actuarial methods and assumptions. Wealth and asset management assets have continued to grow as MFC focuses its growth on high return and lower risk businesses. 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.
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.
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