Manulife Financial Corporation (USA) (NYSE:MFC) – Fitch Ratings Affirms NEGATIVE Outlook


Dallas, Texas 09/12/2013 (Financialstrend) – Headquartered in Toronto, Canada, Manulife Financial Corporation (USA) (NYSE:MFC) offers financial protection and wealth management products and services including mutual funds, banking products, pension products, annuities, individual life insurance and health insurance to individual, business, corporate consumers. It also offers asset management services, reinsurance services and retirement products to institutional clients. It primarily operates in Asia, Canada and the United States.

In a recent statement the rating agency Fitch Ratings affirmed ‘negative’ outlook for MFC in light of low profitability and earnings as these could have significant impact on organic capital generation. Financial market volatility, sustained low interest rates and weak economic recovery further drag the earnings growth and profitability improvements. During the 1H13 company’s net income decreased to CAD735 million compared to CAD892 million during the 1H12.

However, Fitch Ratings did mention about company’s better hedging of volatility, good liquidity, strong capital position, strong business profile alongside sound product and geographic diversity as positive triggers which could lead to a revision of the outlook to ‘stable’ given the improvement in company’s business performance.

The company’s issuance of CAD200 million non-cumulative preferred shares have also been rated ‘BBB’ by Fitch Ratings. MFC plans to use proceeds for refinancing its outstanding debt and other general corporate purposes.

A recent study titled ‘Optimal Annuitization with Stochastic Mortality Probabilities’ from researchers at the Congressional Budget Office and the National Bureau of Economic Research noted that for many individuals, putting too much of assets in immediate annuities could be a risky mistake. It is to be noted that few financial companies including MFC have taken steps to revamp their annuity businesses in recent times given the demand for annuity products during the period of recession. The study also noted that annuities charge substantial fees and could look more attractive provided annuities are better tailored to overall needs of retirees’.