Fitch Rates Manufacturers Life Insurance Subordinated Debt 'A-'

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

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.