DBRS has announced:
today changed the trend on its ratings of the Debt and Preferred Shares of Manulife Financial Corporation (Manulife or the Company) and its related entities to Positive from Stable. The trends on the Claims Paying Ability of The Manufacturers Life Insurance Company and the Short-Term Limited Recourse Notes of Maritime Life Canadian Funding remain stable.
The positive trend reflects the Company’s strong earnings performance since the acquisition of John Hancock Financial Services (JHFS) in 2004, advantageous strategic positions in selected diverse products and geographic market segments, consistency in being among the first to introduce new and innovative products tempered by effective risk and expense management controls and the most conservative capitalization of its peer group. Diversification and strong earnings in the absence of any meaningful financial leverage allow Manulife to stand out among its peers from the perspective of creditworthiness. The resolution of the current turmoil in the capital markets, provided that Manulife continues to cope favourably, is expected to precipitate an upgrade in the Company’s credit ratings.
Following its successful integration of JHFS, Manulife has become one of the five largest life insurance and wealth management organizations in North America and one of the top 10 in the world, enjoying excellent geographic and product diversification, notably in such attractive markets as U.S. long-term care, U.S. variable annuities, and Asian wealth accumulation products, which leverage off the Company’s North American successes. Distribution networks are similarly well-diversified, the broadening and deepening of which is the key to the Company’s continuing success. Like most life insurance concerns, the Company is increasingly focused on growing its wealth management and payout businesses, which are well-aligned with demographic trends, but it retains leading positions in the sale of new life insurance protection products in both Canada and the United States, where profit margins tend to be more generous and cash flows more stable, despite the expected new business strain.
Excellent risk-management practices and strong independent governance has helped the Company to maintain stable profitability. The Company’s large block of in-force policies provides a stable core to earnings as conservative reserving practices pay off over time through the release of excess provisions for adverse deviation and consistently favourable experience gains. Unlike several of its U.S. peers, a high-quality asset portfolio has limited the Company’s exposure to the recent softness in credit markets related to asset-backed securities and the U.S. housing markets.
The issues continue to be rated P-1 by S&P on their national scale.
All three issues are tracked by HIMIPref™. MFC.PR.A is part of the Operating Retractible index; the others are part of the PerpetualDiscount index.
Perhaps this is not, strictly, sufficiently newsworthy to be worth a post … but gracious heavens, we could all use a little bit of good news around now!
[…] The prior trend change to positive was reported by PrefBlog in July. […]