AM Best Affirms Manulife Financial Corporation's A+ Rating and Stable Outlook

AM Best has affirmed Manulife Financial Corporation's A+ (Superior) rating, reflecting the company's strong balance sheet, operating performance, and favorable business profile. The ratings are stable, despite Manulife's exposure to legacy blocks of business, such as long-term care and universal life insurance. The company's strategic moves to de-risk its book of business and prudent risk management practices are noted.

Manulife Financial Corporation (MFC) [NYSE: MFC] has once again demonstrated its financial strength and stability, as acknowledged by AM Best with the maintenance of its A+ (Superior) rating for its life/health (L/H) insurance subsidiaries. This rating is supported by the company's strong balance sheet, operating performance, and favorable business profile [1].

Manulife's balance sheet strength is assessed as very strong by AM Best, attributable to the company's robust risk-adjusted capital position, as measured by the Life Insurance Capital Adequacy Test (LICAT) and Best's Capital Adequacy Ratio (BCAR) [1]. MFC's balance sheet has remained strong despite its exposure to legacy blocks of business, such as long-term care and universal life insurance. In response to these risks, Manulife took steps to de-risk its book of business in late 2023 and early 2024, reinsuring $18 billion of legacy and low return-on-equity business, including $6 billion of long-term care insurance [1].

Manulife's operating performance has also been commendable, with a history of stable earnings and favorable results in its core lines of business. Despite some fluctuations year to year due to market conditions, Manulife's earnings returned to their long-term trends in 2023 [1]. The company's earnings are underpinned by its diverse business model, which includes a robust product offering, geographic diversification throughout Asia, Canada, and the United States, and a strong market presence [1].

Manulife's favorable business profile is driven by its strong brand, leading market positions in its core lines of business, and its ability to leverage technology and innovation to enhance its operations and customer experience [1]. The company's strategic moves to de-risk its book of business and prudent risk management practices are also noted [1].

The outlook for Manulife's ratings is stable, reflecting the company's strong competitive position in the L/H insurance market and its ability to maintain its financial strength and stability despite challenges from legacy business and changing market conditions [1].

References:

[1] AM Best. (2024, March 15). Manulife Financial Corporation's Credit Ratings Affirmed at A+ (Superior) [Press Release]. Retrieved from https://news.ambest.com/newscontent.aspx?refnum=261715