AM Best Affirms Credit Ratings of Manulife Financial Corporation and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of "aa-" (Superior) of the life/health (L/H) insurance subsidiaries of Manulife Financial Corporation (MFC) (Toronto, Canada) (NYSE:MFC). Concurrently, AM Best has affirmed the Long-Term ICR of "a-" (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IRs) of MFC. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and ratings.)

The ratings reflect MFC's L/H subsidiaries' balance sheet strength, which AM Best assesses as very strong, as well as their strong operating performance, favorable business profile and very strong enterprise risk management (ERM).

MFC maintains a balance sheet strength assessment of very strong, exemplified by a strong risk-adjusted capital position, as measured by the Life Insurance Capital Adequacy Test (LICAT) and Best's Capital Adequacy Ratio (BCAR). MFC's LICAT score remains at a favorable and increasing level over recent quarters and its BCAR remains within the strong category. MFC's very strong balance sheet strength assessment is also due in part to the company's financial flexibility, strategically using debt and other financing channels while maintaining a moderate level of financial leverage, as well as strong interest coverage that remains well within the guidelines for its current ratings. The company took steps in late 2023 and early 2024 to de-risk its book of business by reinsuring $18 billion of legacy and low return-on-equity business, which included $6 billion of long-term care insurance.

From an operating performance perspective, MFC has a history of stable earnings and continues to report favorable earnings in its core lines of business despite some fluctuations year to year due to market conditions. MFC's restated 2022 earnings under IFRS 17 were negatively impacted by this change as well as the adoption of IFRS 9 hedge accounting and expected credit loss principles. This represented a one-time impact and results returned in line with long-term trends in 2023. The company's earnings are reflective of its diverse business model, which includes a robust product offering, geographic diversification throughout Asia, Canada and the United States and a strong market presence, with MFC holding leading market positions in its core lines of business. The company's ERM program, which AM Best assesses as very strong, supports MFC's risks within its balance sheet, operating performance and business profile.

Partially offsetting the aforementioned factors is MFC's exposure to its legacy blocks of business, including long-term care and universal life with secondary guarantees, which comprise a significant amount of the company's overall reserves. AM Best notes MFC's prudent management of these blocks of business through loss prevention initiatives, policy conversion programs, reinsurance and conservative reserving practices. While the alternative long-duration asset (ALDA) portfolio has exhibited some volatility, it has demonstrated a favorable historical track record and generally has enhanced MFC's investment yield while providing investment diversity; MFC invests in these asset classes and actively manages them. AM Best notes that ALDA's industry-wide performance in 2023 was less favorable than other asset classes and may contribute to earnings volatility.

The FSR of A+ (Superior) and the Long-Term ICRs of "aa-" (Superior) have been affirmed with stable outlooks for the following L/H subsidiaries of Manulife Financial Corporation:

• The Manufacturers Life Insurance Company
• John Hancock Life Insurance Company (U.S.A.)
• John Hancock Life Insurance Company of New York
• John Hancock Life & Health Insurance Company

The following Long-Term IRs under the shelf registration have been assigned with stable outlooks.

Manulife Financial Corporation-

-- "a-" (Excellent) on senior unsecured debt

-- "bbb+" (Good) subordinated debt

-- "bbb" (Good) on preferred stock

The following Long-Term IRs have been affirmed with stable outlooks:

Manulife Financial Corporation—

-- "a-" (Excellent) on USD 1 billion 4.15% senior unsecured fixed rate, due 2026

-- "a-" (Excellent) on USD 500 million 2.484% senior unsecured fixed rate, due 2027

-- "a-" (Excellent on USD 750 million 3.703% senior unsecured notes, due 2032

-- "a-" (Excellent) on USD 750 million 5.375% senior unsecured fixed rate, due 2046

-- "a-" (Excellent) on USD 1.155 billion 3.05% senior unsecured fixed rate, due 2060

-- "bbb+" (Good) on SGD 500 million 3.0% subordinated debentures, due 2029

-- "bbb+" (Good) on CAD 1 billion 2.237% subordinated debentures, due 2030

-- "bbb+" (Good) on USD 750 million 4.061% subordinated debentures, due 2032

-- "bbb+" (Good) on USD 1.2 billion 5.409% subordinated debentures, due 2033

-- "bbb+" (Good) on CAD 1 billion 2.818% subordinated debentures, due 2035

-- "bbb+" (Good) on CAD 2 billion 3.375% limited recourse capital notes, due 2081

-- "bbb+" (Good) on CAD 1.2 billion 4.1% limited recourse capital notes, due 2082

-- "bbb+" (Good) on CAD 1 billion 7.117% limited recourse capital notes, due 2082

-- "bbb" (Good) on CAD 350 million 4.65% non-cumulative Class A Series 2 preferred shares

-- "bbb" (Good) on CAD 300 million 4.5% non-cumulative Class A Series 3 preferred shares

-- "bbb" (Good) on CAD 163 million 2.348% non-cumulative Class 1 Series 3 preferred shares

-- "bbb" (Good) on CAD 250 million 5.978% non-cumulative Class 1 Series 9 preferred shares

-- "bbb" (Good) on CAD 200 million 6.159% non-cumulative Class 1 Series 11 preferred shares

-- "bbb" (Good) on CAD 200 million 6.35% non-cumulative Class 1 Series 13 preferred shares

-- "bbb" (Good) on CAD 200 million 5.775% non-cumulative Class 1 Series 15 preferred shares

-- "bbb" (Good) on CAD 350 million 3.8% non-cumulative Class 1 Series 17 preferred shares

-- "bbb" (Good) on CAD 250 million 3.675% non-cumulative Class 1 Series 19 preferred shares

-- "bbb" (Good) on CAD 250 million 5.942% non-cumulative Class 1 Series 25 preferred shares

-- "bbb" (Good) on CAD 41.6 million (37 million outstanding) variable rate non-cumulative Class 1 Series 4 preferred shares

Manulife Finance (Delaware), L.P.—

-- "bbb+" (Good) on CAD 650 million 5.059% subordinated debentures, due 2041

John Hancock Life Insurance Company (U.S.A.) — "a+ (Excellent) program rating

-- "a+" (Excellent) on all outstanding notes issued under the program John Hancock Signature Notes (formerly issued by John Hancock Life Insurance Company)

This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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