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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 05, 2014 03:05 PM (EDT)
A.M. Best has commented that the ratings of Manulife Financial Corporation (MFC) (Toronto, Canada) and its insurance subsidiaries are unchanged following the announcement that its subsidiary, The Manufacturers Life Insurance Company (MLI) (Toronto, Canada), intends to acquire the Canadian-based operations of Standard Life plc for approximately CAD 4 billion.
A.M. Best believes the transaction will help to support MLI's strong market position in Canada, specifically in the Quebec market, while providing an opportunity to further grow its wealth management business globally. The transaction will add scale to MLI's core business lines in Canada, including group retirement, mutual funds and group benefits. The closing is expected to occur during the first quarter of 2015.
The financing of the transaction includes approximately CAD 2.1 billion of new equity, and potentially, additional debt and/or preferred share issuances. A.M. Best expects that financial metrics, including leverage and risk-adjusted capitalization, will remain within tolerance levels.
Offsetting factors include the approximately CAD 2 billion of goodwill and intangibles the transaction will generate upon closing as well as possible integration risks. A.M. Best will continue to monitor the transaction as well as its impact on MLI's operating results and capitalization when the acquisition is finalized.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.