Rating Actions on Manulife - Analyst Blog

The issuer credit ratings (ICR) and debt ratings of  Manulife Financial Corporation (MFC) have been lowered to “a-” from “a” by A.M. Best Co. The rating agency has also downgraded the ICR and debt ratings to “a-” from “a” of The Manufacturers Investment Corporation, a subsidiary of Manulife Financial.

Also, A.M. Best Co. has lowered the ICR to “aa-” from “aa” but reiterated the financial strength rating (FSR) of A+ (Superior) of Manufacturers Life Insurance Company, John Hancock Life Insurance Company and John Hancock Life Insurance Company of New York (Valhalla, NY) and John Hancock Life & Health Insurance Company, subsidiaries of Manulife Financial.

The ratings reflect Manulife Financial's exposure to the equity markets and low interest rates in the United States resulting in losses reported by the company over the past few quarters.

However, Manulife's strong regulatory capital position, solid business position in Canada, diversified revenues from operations in the United States and Asia and continued efforts to de-risk its balance sheet are also reflected in the rating. The company expects to reduce its equity sensitivity by approximately 60%-75% by 2014.

The company also expects to further lower its interest rate exposures by approximately 25% by the end of 2012 and approximately 50% by the end of 2014.

Manulife Financial reported its third-quarter 2010 adjusted operating earnings of 44 cents per share, lower than 50 cents per share reported in the prior-year quarter. The Zacks Consensus Estimate for fourth-quarter 2010 is 47 cents. For full years 2010 and 2011, the Zacks Consensus Estimates are, respectively, loss of 85 cents per share and earnings of $1.67 per share.

MetLife Inc. (MET), which competes with Manulife Financial, posted a solid third quarter earnings of 99 cents, well ahead of year-ago results primarily due to a strong growth in the U.S. business segment, solid underwriting results as well as higher variable annuity deposits and net investment income. However, higher expenses and lower-than-expected premiums were partial offsets.

Headquartered in Toronto, Canada, Manulife Financial through its subsidiaries operates as a life insurance company. The company also offers reinsurance services. The company operates as Manulife Financial in Canada and Asia and primarily as John Hancock in the United States.

 
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