A.M. Best Affirms Credit Ratings of Manulife Financial Corporation and Its Subsidiaries
The ratings reflect MFC’s balance sheet strength, which
Offsetting rating factors include MFC’s elevated investment risk relative to capital with significant in-force balance sheet exposure to equity and credit risk embedded in MFC’s alternative asset portfolio (i.e., public equities, real estate, timber and agriculture), which the company views as a natural hedge against their long-term liabilities in addition to providing asset diversification. MFC retains a large block of variable annuities that remain subject to equity market volatility, future policyholder annuitization election rates and interest rate risk, and are considered well-hedged given the degree of embedded risk that exist within the block of business. While the company has discontinued sales of its stand-alone individual long-term care (LTC) products and has continued to prudently manage its in-force legacy LTC block through rate increases and additional reserve increases,
MFC has temporarily elevated financial leverage above the company’s long-term targeted level due to recent pre-financing capital management activities, which over time is expected to decline from the current level that exists today. In addition, interest coverage is currently lower than expectations, albeit subject to the accounting volatility inherent in IFRS accounting and offset by a very strong liquidity profile in its investment portfolio.
For a complete listing of FSRs, Long-Term ICRs and Long-Term Issue Credit Ratings for MFC and its life/health subsidiaries, please visit
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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