Fitch Rates Manulife Financial’s Senior Unsecured Notes ‘A-‘

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has assigned an 'A-' rating to Manulife Financial Corporation's (MFC) USD270 million 3.527% senior notes due 2026, which is anticipated to close on Dec. 2, 2016.

KEY RATING DRIVERS

The rating for the new offering is equivalent to the rating on MFC's existing senior debt. Proceeds from the issuance will be used for general corporate purposes. Fitch expects pro forma financial leverage following the senior note issuance along with the November 2016 preferred share issuance and fourth-quarter debt redemption to decrease to 23.3% from 23.8% at Sept. 30, 2016.

Fitch affirmed the ratings of MFC and its insurance operating subsidiaries with a Stable Outlook on July 18, 2016. For more details, see Fitch's press release at www.fitchratings.com.

RATING SENSITIVITIES

Key rating triggers for MFC that could lead to a downgrade include:

--Decline in core earnings;

--Elevated charges for actuarial methods and assumptions or experience losses;

--Fixed-charge coverage on a core earnings basis below 6x;

--An increase in financial leverage to over 25% or an increase in total leverage to over 35%;

--A sustained drop in MFC's risk-adjusted capital position with no plans or ability to rectify. This would include the minimum continuing capital and surplus requirement (MCCSR) ratio falling below 200%. The ratings on the U.S. insurance subsidiaries could be affected if the U.S. risk-based capital ratio fell below 400%;

--Large acquisitions that are outside the company's historical risk preference or that have a material impact on the company's leverage and capitalization.

Key ratings triggers for MFC that could lead to an upgrade include:

--Improvement in return on equity (ROE) based on core earnings to 12% or higher;

--Stability in reported net income;

--An increase in fixed-charge coverage on a core earnings basis to over 10x;

--Maintaining current capital and earnings sensitivity to interest rates and equity markets;

--Maintenance of financial leverage at or below 20%.

FULL LIST OF RATING ACTIONS

Fitch has assigned the following rating:

Manulife Financial Corporation

--USD270 million 3.527% senior notes due 2026 at 'A-'.

Fitch currently rates the MFC entities as follows:

Manulife Financial Corporation

--Long-term IDR at 'A';

--CAD400 million 5.505% medium term notes due 2018 at 'A-';

--CAD600 million 7.768% medium term notes due 2019 at 'A-';

--USD500 million 4.90% senior notes due 2020 at 'A-';

--USD1 billion 4.15% senior notes due 2026 at 'A-';

--USD750 million 5.375% senior notes due 2046 at 'A-';

--USD1 billion 4.7% senior notes due 2046 at 'A-';

--SGD500 million 3.85% fixed/floating subordinated debentures due 2026 at 'BBB+';

--CAD350 million 4.65% non-cumulative class A, series 2, preferred stock at 'BBB-';

--CAD300 million 4.50% non-cumulative class A, series 3, preferred stock at 'BBB-';

--CAD158 million 2.178% non-cumulative rate reset, class 1, series 3, preferred stock at 'BBB-';

--CAD42 million non-cumulative floating rate, class 1, series 4, preferred stock at 'BBB-';

--CAD200 million 4.40% non-cumulative rate reset, class 1, series 5, preferred stock at 'BBB-';

--CAD250 million 4.60% non-cumulative rate reset, class 1, series 7, preferred stock at 'BBB-';

--CAD250 million 4.40% non-cumulative rate reset, class 1, series 9, preferred stock at 'BBB-';

--CAD200 million 4% non-cumulative rate reset, class 1, series 11, preferred stock at 'BBB-';

--CAD200 million 3.8% non-cumulative rate reset, class 1, series 13, preferred stock at 'BBB-';

--CAD200 million 3.9% non-cumulative rate reset, class 1, series 15, preferred stock at 'BBB-';

--CAD350 million 3.9% non-cumulative rate reset, class 1, series 17, preferred stock at 'BBB-';

--CAD250 million 3.8% non-cumulative rate reset, class 1, series 19, preferred stock at 'BBB-';

--CAD425 million 5.6% non-cumulative rate reset, class 1, series 21, preferred stock at 'BBB-';

--CAD475 million 4.85% non-cumulative rate reset, class 1, series 23, preferred stock at 'BBB-'.

The Manufacturers Life Insurance Company

--Insurer Financial Strength (IFS) at 'AA-';

--IDR at 'A+';

--CAD550 million 4.21% fixed/floating subordinated debentures due 2021 (Manulife Financial Corp. guarantor) at 'A';

--CAD500 million 4.165% fixed/floating subordinated debentures due 2022 (Manulife Financial Corp. guarantor) at 'A';

--CAD200 million 2.819% fixed/floating subordinated debentures due 2023 (Manulife Financial Corp. guarantor) at 'A';

--CAD250 million 2.926% fixed/floating subordinated debentures due 2023 (Manulife Financial Corp. guarantor) at 'A';

--CAD500 million 2.811% fixed/floating subordinated debentures due 2024 (Manulife Financial Corp. guarantor) at 'A';

--CAD500 million 2.64% fixed/floating subordinated debentures due 2025 (Manulife Financial Corp. guarantor) at 'A';

--CAD750 million 2.1% fixed/floating subordinated debentures due 2025 (Manulife Financial Corp. guarantor) at 'A';

--CAD350 million 2.389% fixed/floating subordinated debentures due 2026 (Manulife Financial Corp. guarantor) at 'A';

--CAD1 billion 3.181% fixed/floating subordinated debentures due 2027 (Manulife Financial Corp. guarantor) at 'A'.

The Manufacturers Investment Corporation

--IDR at 'A';

--Short-term IDR at 'F1';

--Commercial paper at 'F1'.

Manulife Finance, L.P.

--CAD550 million 4.448% fixed/floating senior debentures due 2026 (Manulife Financial Corp. guarantor) at 'A-';

--CAD650 million 5.059% fixed/floating subordinated debentures due 2041 (Manulife Financial Corp. guarantor) at 'BBB+'.

Manulife Financial Capital Trust II

--CAD1 billion 7.405% MaCS II series 1 at 'A-'.

John Hancock Life Insurance Co (U.S.A.)

--Insurer Financial Strength (IFS) at 'AA-';

--IDR at 'A+';

--USD450 million surplus notes 7.375% due 2024 at 'A'.

The John Hancock Life Insurance Company of New York

--IFS at 'AA-'.

John Hancock Life & Health Insurance Company

--IFS at 'AA-'.

Date of Relevant Rating Committee: July 18, 2016

Additional information is available on www.fitchratings.com

Applicable Criteria

Insurance Rating Methodology - Effective May 17, 2016 to Sept. 15, 2016 (pub. 17 May 2016)

https://www.fitchratings.com/site/re/881564

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1015570

Endorsement Policy

https://www.fitchratings.com/regulatory

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Copyright (c) 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.

The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.

For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

View source version on businesswire.com: http://www.businesswire.com/news/home/20161130006108/en/

Fitch Ratings, Media Relations

Hannah James, New York

Tel: + 1 646 582 4947

Email: [email protected]

or

Primary Analyst

Dafina M. Dunmore, CFA

Director

+1-312-368-3136

Fitch Ratings, Inc.

70 W. Madison Street

Chicago, IL 60602

or

Secondary Analyst

Jamie Tucker, CPA

Associate Director

+1-212-612-7856

or

Committee Chairperson

James B. Auden, CFA

Managing Director

+1-312-368-3146

Source: Fitch Ratings