AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings of “aa-” (Superior) for the life and health insurance subsidiaries of Manulife Financial Corporation (MFC). The ratings, which remain stable, reflect the company’s very strong balance sheet, strong operating performance, and favourable business profile.
MFC’s balance sheet strength is highlighted by its robust risk-adjusted capital position, as measured by the Life Insurance Capital Adequacy Test and Best’s Capital Adequacy Ratio. The company has strategically used debt and other financing channels whilst maintaining moderate financial leverage. Over recent years, MFC has derisked its business by reinsuring billions in low return-on-equity and non-core business lines, particularly in long-term care insurance.
The company’s stable earnings are supported by a diverse business model, including a wide range of insurance and wealth management products, and a strong market presence across Asia, Canada, and the US. AM Best also noted MFC’s very strong enterprise risk management, which supports its overall business strategy.
Despite these strengths, MFC still faces exposure to non-core business lines, including long-term care and universal life with secondary guarantees. However, AM Best acknowledges MFC’s prudent management of these areas through loss prevention, policy conversion, and conservative reserving practices.
Looking ahead, MFC’s strategic initiatives, such as the implementation of generative artificial intelligence and its entry into the Indian life insurance market through a joint venture, present additional execution risks but also potential growth opportunities.
