Standard & Poor’s Ratings Services today assigned a P-1 rating to a $100 million preferred share issue from Manufacturers Life Insurance Co., and raised its ratings on the company’s Halifax-based subsidiary, Maritime Life Assurance Co. and Maritime Life’s preferred shares.

The ratings actions follow Manulife’s announcement that it plans to combine its operations with those of Maritime Life’s, subject to Maritime Life’s policyholder and preferred shareholder approval and regulatory approval, S&P reports. “By combining the operations Manulife plans to simplify its insurance operations in Canada, streamline the company’s regulatory requirements, and strengthen the branding under the Manulife banner,” said Standard & Poor’s credit analyst Donald Chu.

As part of this initiative, Manulife plans to exchange Maritime Life’s $100 million in noncumulative preferred shares for $100 million in Manulife’s noncumulative preferreds. And, Manulife is expected to redeem Maritime Life’s remaining $135 million in outstanding preferred shares at par by year-end 2004, which S&P says will reduce its financial leverage and fixed-charge obligations.

The rating agency says that the financial strength rating on Manulife Financial’s/John Hancock’s primary operating subsidiaries reflects the group’s very strong and geographically diversified business positions in Canada, the U.S., and Asia; extremely strong capitalization; solid operating performance; and an accomplished management team. The combined organization now represents one of the top insurance organizations in Canada (in the top three), North America (top five), and globally (top 10), as measured by assets.

Partially offsetting these strengths are the operational and integration risk associated with the John Hancock acquisition; the higher risk profile of John Hancock’s institutional spread-based businesses, long-term care business, and its bond investment portfolio; and the decrease in the company’s quality of capital due to the goodwill and intangibles that were created by this transaction, S&P said.

It also said that its positive outlook on John Hancock’s U.S. operating insurance companies reflects the view that as the acquired insurance operating companies become more closely integrated, Standard & Poor’s could eventually view them as core subsidiaries, at which point, the ratings would be equalized with those on Manulife. In turn, this translates into a positive outlook on Manulife Financial. In future, the ratings on John Hancock Financial Services Inc. are expected to mirror those on Manulife Financial, S&P says.