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 (ERM).

MFC’s balance sheet remains solid despite the economic and insurance-related impacts of the COVID-19 global pandemic. MFC’s balance sheet strength reflects its strong capital position with a Life Insurance Capital Adequacy Test (LICAT) ratio above that of its peers and a Best’s Capital Adequacy Ratio (BCAR) score assessed as strong, as the company continues to focus on growing more capital-efficient lines of business. In addition to MFC’s balance sheet strength assessment, the ratings also acknowledge the company’s generally strong operating performance within each of its core lines of business over the past several years, with pre-tax income of over CAD 5 billion in each of the past three years. MFC’s return on equity was 11.6% at year-end 2020 and has benefited from numerous expense efficiency initiatives in recent periods.

MFC also benefited from its diversified business profile over the past year, which includes leading market positions in many of its core lines of business and an expansive geographic footprint in Asia, Canada and the United States. Additionally, innovation played a crucial role during an unpredictable year, and MFC’s digitization efforts enabled continued sales, servicing of customers and a relatively seamless transition to a remote work environment. Ultimately, the company’s very strong ERM capabilities are supportive of the risks within its balance sheet, operating performance and business profile.