Fitch Rates Manufacturers Life Insurance Subordinated Debt 'A-'

CHICAGO--(BUSINESS WIRE)--

Fitch Ratings assigns an 'A-' rating to Manufacturers Life Insurance Company's (MLI) recently issued debentures:

--CAD200 million 2.819% fixed/floating subordinated debentures due 2023.

KEY RATING DRIVERS

The debentures are fully and unconditionally guaranteed on a subordinated basis by parent, Manulife Financial Corporation (MFC). Fitch anticipates that the net proceeds will be used for general corporate purposes, including refinance debt. These subordinated debentures receive no equity credit in Fitch's financial leverage ratio.

At Dec. 31, 2012, MFC's financial leverage was 25%. Pro forma financial leverage, including the CAD200 million subordinated debentures increases incrementally but is expected to decline modestly in the intermediate term driven by improved organic capital generation and maturity of debt.

Fitch considers MFC's debt service capacity as below average for the rating as fixed-charge coverage on reported earnings was 3.5x and on a core earnings basis 5.6x in 2012. Fitch expects core earnings-based, fixed-charge coverage to exceed 5.5x in 2013.

On Feb. 11, 2013, Fitch affirmed MFC's and its primary insurance related operating subsidiaries' ratings, including The Manufacturers Life Insurance Company (MLI) and John Hancock Life Insurance Company (U.S.A.) (JHUSA). The Outlook is Negative for all ratings.

RATING SENSITIVITIES

Key rating triggers for MFC that could lead to a downgrade include:

--Decline in core earnings;

--Elevated charges for actuarial methods and assumptions or experience losses;

--Fixed charge coverage below 5.5x;

--Financial leverage increases to above 30% from current levels;

--Operating company Minimum Continuing Capital and Surplus Ratio (MCCSR) ratio below 190%.

Key ratings triggers for MFC that could lead to a revision of the Outlook to Stable include:

--Maintain profitability and related fixed-charge coverage consistent with 2012;

--Maintain current earnings volatility levels;

--Sustain current capital and earnings sensitivity to equity markets.

Fitch assigns the following rating:

The Manufacturers Life Insurance Company

--CAD200 million 2.819% fixed/floating subordinated debentures due 2023 (Manulife Financial Corp. guarantor) 'A-'

Fitch currently rates the MFC entities as follows:

Manulife Financial Corporation

--Issuer Default Rating (IDR) at 'A'

--CAD350 million medium term notes 4.67% due 2013 'A-'

--CAD1 billion medium term notes 4.896% due 2014 'A-'

--CAD550 million medium term notes 5.161% due 2015 'A-'

--USD600 million senior notes 3.40% due 2015 'A-'

--CAD900 million medium term notes 4.079% due 2015 'A-'

--CAD400 million medium term notes 5.505% due 2018 'A-'

--CAD600 million medium term notes 7.768% due 2019 'A-'

--USD500 million senior notes 4.90% due 2020 'A-'

--CAD350 million 4.10% class A, series 1, preferred stock 'BBB'

--CAD350 million 4.65% class A, series 2, preferred stock 'BBB'

--CAD300 million 4.50% class A, series 3, preferred stock 'BBB'

--CAD450 million 6.60% non-cumulative, preferred class A, series 4 stock 'BBB'

--CAD350 million 5.60% non-cumulative rate reset, preferred class 1, series 1 stock 'BBB'

--CAD200 million 4.20% non-cumulative rate reset, preferred class 1, series 3 stock 'BBB'

--CAD250 million 4.40% non-cumulative rate reset, preferred class 1, series 5 stock 'BBB'

--CAD250 million 4.60% non-cumulative rate reset, preferred class 1, series 7 stock 'BBB'

--CAD250 million 4.40% non-cumulative rate reset, preferred class 1, series 9 stock 'BBB'

--CAD200 million 4.00% non-cumulative rate reset, preferred class 1, series 11 stock 'BBB'

The Manufacturers Investment Corporation

--IDR at 'A'

--Short-term IDR a'F1'

--Commercial paper 'F1'

Manulife Financial Capital Trust II

--CAD1 billion 7.405% MaCS II series 1 'A-'

Manulife Finance, L.P.

--CAD550 million 4.448% fixed/floating senior debentures due 2026 (Manulife Financial Corp. guarantor) 'A-'

--CAD650 million 5.059% fixed/floating subordinated debentures due 2041 (Manulife Financial Corp. guarantor) 'BBB+'

The Manufacturers Life Insurance Company

--Insurer Financial Strength (IFS) 'AA-'

--IDR at 'A+'

--CAD500 million 4.165% fixed/floating subordinated debentures due 2022 (Manulife Financial Corp. guarantor) 'A'

--CAD550 million 4.21% fixed/floating subordinated debentures due 2021 (Manulife Financial Corp. guarantor) 'A-'

John Hancock Life Insurance Co (U.S.A.)

--IFS 'AA-'

--IDR 'A+'

--USD450 million surplus notes 7.375% due 2024 'A'.

The John Hancock Life Insurance Company of New York

--IFS 'AA-'

John Hancock Life & Health Insurance Company

--IFS 'AA-'

John Hancock Global Funding II

--Global MTN program 'AA-'

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (Jan. 11, 2013)

Applicable Criteria and Related Research

Insurance Rating Methodology ￢ﾀﾔ Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=698731

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