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TMCNet:  A.M. Best Assigns Debt Rating to The Manufacturers Life Insurance Company's New Subordinated Debt Offering

[February 25, 2013]

A.M. Best Assigns Debt Rating to The Manufacturers Life Insurance Company's New Subordinated Debt Offering

OLDWICK, N.J. --(Business Wire)--

A.M. Best Co. has assigned a debt rating of "a" to the recently issued CAD 200 million, 2.819% aggregate principal fixed/floating subordinated debentures due February 26, 2023 of The Manufacturers Life Insurance Company (MLI) (domiciled in Toronto, Canada). The assigned outlook is stable.

The proceeds from the offering will be utilized for general corporate purposes including refinancing of debt. MLI may redeem the debentures on or after February 26, 2018. The debentures are fully and unconditionally guaranteed on a subordinated basis by the holding company, Manulife Financial Corporation (MFC). With the issuance of the subordinated debentures, A.M. Best notes that MFC's existing financial leverage remains temporarily elevated and is expected to decline following forthcoming debt maturity in 2013. However, MFC's financial leverage remains within the range that supports its current ratings

MFC reported a positive net gain in its fourth-quarter 2012 net income, over the same quarter in 2011, primarily due to an increase in its fee income on higher funds under management, growth in its insurance sales, improvement in new business margins and investment related gains. Earnings of MFC, an International Financial Reporting Standards' reporter, have recently been impacted by the volatility in its realized and unrealized gains on assets supporting insurance and investment contract liabilities mainly due to the impact of interest rate changes on bond and fixed income derivative positions as well as interest rate swaps that support the company's dynamic hedging program.

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 www.ambest.com/ratings/methodology.

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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


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