A.M. Best Affirms Ratings of Manulife Financial Corporation and Its Subsidiaries

  A.M. Best Affirms Ratings of Manulife Financial Corporation and Its

Business Wire

OLDWICK, N.J. -- December 20, 2012

A.M. Best Co. has affirmed the financial strength ratings (FSR) of A+
(Superior) and issuer credit ratings (ICR) of "aa-" of the life insurance
subsidiaries of Manulife Financial Corporation (MFC) (Toronto, Canada) [NYSE:
MFC]. Concurrently, A.M. Best has affirmed the ICR of “a-” as well as all
existing debt ratings of MFC. The outlook for all ratings is stable. (See link
below for a detailed listing of the companies and ratings.)

The rating affirmations reflect Manulife's solid market position in the global
markets, continuing progress in de-risking its balance sheet by reducing its
exposure to equity and interest rate risks, and its revised product focus on
less capital intensive lines of business while maintaining adequate regulatory
risk-adjusted capitalization, despite low interest rate challenges and
restructuring of its business platform. MFC also maintains significant scale
in its core business lines and has seen growing assets under management.

A.M. Best notes MFC’s proactive risk management platform including enhanced
risk oversight functions. Over the last few years, MFC's various strategic
actions have moderated the impact of the macro-economic challenges and equity
market volatility on its consolidated risk profile and balance sheet. Key
strategic actions have included accelerated macro and dynamic hedging
programs, changes in product design and pricing and the targeting of specific
products for growth in its various geographical markets while reducing the
sales of capital intensive products, especially variable annuities in the
United States.

A.M. Best remains concerned with MFC’s significant in-force exposure to equity
market and interest rate risk, particularly within its insurance segments,
reduced interest coverage and somewhat elevated financial leverage. Despite
discontinuing sales of U.S. variable annuities, largely written though John
Hancock Life Insurance Company (U.S.A.), A.M. Best believes that MFC will
continue to face challenges in managing its large book of in-force business
given the persistently low interest rate environment and equity market

In addition, MFC’s consolidated earnings have remained volatile due to
unfavorable reserve adjustments for actuarial assumption changes, largely
related to current interest and equity market conditions. Canadian
International Financial Reporting Standards (IFRS) generally result in more
volatile results with changing equity values and interest rates relative to
U.S. GAAP. On a U.S. GAAP basis, he company’s results were more favorable.
A.M. Best also remains concerned over MFC’s long-term care book of business,
currently written through John Hancock Life Insurance Company (U.S.A.), but
notes that the company continues to make progress in achieving its targeted
price increase approvals. In addition, MFC's exposure to real estate, through
direct mortgage loans and commercial real estate, remains high as a percentage
of total invested assets. A.M. Best recognizes that the direct mortgage loans
have been conservatively underwritten with low loan-to-values and high debt
service coverage ratios and continue to have low amounts in arrears. In
addition, approximately one-third of the company’s mortgage portfolio is
insured by a federal government agency, Canada Mortgage and Housing
Corporation (CMHC) (Canada’s national housing agency).

A.M. Best believes MFC’s ratings are well positioned at their current rating
level for the near to medium term. Key factors that could result in negative
rating actions include a significant and sustained decline in MFC’s
risk-adjusted capitalization; operating performance that does not meet A.M.
Best's expectations over a sustained period; or difficulty in managing large
in-force blocks of interest and equity market sensitive business.

For a complete list of Manulife Financial Corporation and its subsidiaries'
FSRs, ICRs and debt ratings, please visit

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at

Founded in 1899, A.M. Best Company is the world’s oldest and most
authoritative insurance rating and information source. For more information,
visit www.ambest.com.

       Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Co.
Edward Kohlberg, 908-439-2200, ext. 5664
Senior Financial Analyst
Raj Shah, 908-439-2200, ext. 5409
Assistant Vice President
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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