A.M. Best Assigns Debt Rating to Manulife's Proposed Preferred Shares

Strategic Insights -

A.M. Best Co., a leading credit rating agency, has assigned a debt rating of A+ to Manulife's proposed issuance of CAD 100 million 6.10% perpetual, non-cumulative preferred shares. The proposed shares are being issued in conjunction with the merger of Manulife Financial Corp.'s operations with Maritime Life Assurance Co. and MFC Insurance, and the expected name change to The Manufacturers Life Insurance Co. The debt and financial strength ratings of Manulife Financial Corp. and its life insurance subsidiaries remain unaffected.

Key Takeaways:

  • A.M. Best has assigned a debt rating of A+ to Manulife's proposed CAD 100 million 6.10% perpetual, non-cumulative preferred shares, which will not be redeemable prior to Dec. 31, 2007.
  • The proposed preferred shares are being issued in conjunction with the merger of Manulife Financial Corp.'s operations with Maritime Life Assurance Co. and MFC Insurance, which requires approval from the voting policyholders and the Minister of Finance for Canada.
  • Manulife will make a securities exchange offer to holders of Maritime Life's Second Preferred Shares, Series 3, offering new preferred shares with identical economic terms.
  • A.M. Best believes Manulife's consistent flow of earnings from its core businesses is sustainable and provides ample liquidity to support its long-term debt service capabilities.
  • Manulife's operational and geographic diversification has insulated it from wide fluctuations in revenues and earnings, with CAD 360.2 billion in funds under management as of June 30, 2004.
  • The merger plan requires approval from the voting policyholders of Manulife, Maritime Life, and MFC Insurance, as well as the preferred shareholders of Maritime Life.
  • The Minister of Finance for Canada and the Superintendent of Financial Institutions must also approve the merger.

Statistics:

  • CAD 100 million: the proposed amount of 6.10% perpetual, non-cumulative preferred shares.
  • 6.10%: the interest rate on the proposed perpetual, non-cumulative preferred shares.
  • Dec. 31, 2007: the date by which the proposed preferred shares cannot be redeemed.
  • CAD 360.2 billion: the funds under management of Manulife Financial Corp. as of June 30, 2004.
  • 2004: the year in which the merger is expected to take place (Dec. 30).
  • 19: the number of countries and territories in which Manulife Financial Corp. operates.

Sources:

  • A.M. Best Co. - A.M. Best Assigns Debt Rating to Manulife's Proposed Preferred Shares
  • COMTEX - A.M. Best Assigns Debt Rating to Manulife's Proposed Preferred Shares
  • Manulife Financial Corp. - Funds Under Management as of June 30, 2004