November 22, 2017 / 3:24 PM / a year ago

Fitch Rates Manulife Financial's Subordinated Notes 'BBB+'

(The following statement was released by the rating agency) CHICAGO, November 22 (Fitch) Fitch Ratings assigns a 'BBB+' rating to Manulife Financial Corporation's (MFC) S$500 million 3% subordinated notes due 2029. KEY RATING DRIVERS The rating for the new offering is equivalent to the rating on MFC's existing subordinated debt. The notes are rated two notches below the company's 'A' Insurer Default Rating (IDR), which reflects Fitch's assumption of "poor" recovery prospects in the event of default given the level of subordination. Proceeds from the issuance will be used to fund the financing or refinancing of new and/or existing eligible assets as defined in the Manulife Green Bond Framework. Fitch expects financial leverage to remain within rating expectations. Fitch affirmed the ratings of MFC and its insurance operating subsidiaries with a Stable Outlook on March 17, 2017. For more details, see Fitch's press release at RATING SENSITIVITIES Key rating triggers for MFC that could lead to a downgrade include: --Fixed-charge coverage on a core earnings basis below 6x; --An increase in financial leverage to over 25% or an increase in total leverage to over 35%; --Risky asset ratio above 140%; --A sustained drop in MFC's risk-adjusted capital position evidenced by an MCCSR ratio below 200% or a less favorable view of capital under the LICAT framework; --Large acquisitions that are outside the company's historical risk preference or that have a material impact on the company's leverage and capitalization. Key ratings triggers for MFC that could lead to an upgrade include: --Improvement in return on equity (ROE) based on core earnings rising to 12% or higher; --Stability in reported net income; --An increase in fixed-charge coverage on a core earnings basis to over 10x; --Maintaining current capital and earnings sensitivity to interest rates and equity markets; --Maintenance of financial leverage at or below 20%. FULL LIST OF RATING ACTIONS Fitch has assigned the following rating: Manulife Financial Corporation --S$500 million 3% subordinated notes due 2029 'BBB+'. Fitch currently rates the MFC entities as follows: Manulife Financial Corporation --Long-Term IDR 'A'; --Medium term notes 'A-'; --Senior notes 'A-'; --Subordinated notes 'BBB+'; --Non-cumulative preferred stock 'BBB-'. The Manufacturers Life Insurance Company --Insurer Financial Strength (IFS) 'AA-'; --IDR 'A+'; --Subordinated notes 'A'. The Manufacturers Investment Corporation --IDR 'A'; --Short-Term IDR 'F1'; --Commercial paper 'F1'. Manulife Finance, L.P. --Subordinated notes (Manulife Financial Corp. guarantor) 'BBB+'. Manulife Financial Capital Trust II --MaCS II 'A-'. John Hancock Life Insurance Co (U.S.A.) --IFS 'AA-'; --IDR 'A+'; --Surplus notes 'A'. The John Hancock Life Insurance Company of New York --IFS 'AA-'. John Hancock Life & Health Insurance Company --IFS 'AA-'. Contact: Primary Analyst Dafina M. Dunmore, CFA Director +1-312-368-3136 Fitch Ratings, Inc. 70 W. Madison Street Chicago, IL 60602 Secondary Analyst Jamie Tucker, CPA Associate Director +1-212-612-7856 Committee Chairperson James B. Auden, CFA Managing Director +1-312-368-3146 Date of Relevant Rating Committee: March 16, 2017 Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology ― Effective Sept. 15, 2016–April 26, 2017 (pub. 15 Sep 2016) here Additional Disclosures Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. 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