Moody’s Investors Service downgraded ratings on several units of Manulife Financial Corp. on Wednesday, after the company reported its first ever quarterly loss last month.

The ratings agency downgraded the insurance financial strength ratings on subsidiaries including John Hancock Life Insurance Co to Aa3 from Aa1, and lowered the debt ratings of the subsidiaries by two notches.

Moody’s said the rating outlook is negative.

Manulife reported a large loss last month as the global financial crisis and resulting slide in stock markets forced it to put aside more reserves to cover investment guarantees linked to some of its products.

“Moody’s based its decision to downgrade Manulife on the company’s weakened financial flexibility and capitalization, caused by the decline in equity markets globally,” the agency said in a statement.

“This substantial decline in equity markets has caused a rise in the reserves and regulatory capital that Manulife must set aside for the guarantees it writes on its variable annuity and segregated fund products.”

Moody’s said the decision to cut the ratings by two notches, as opposed to one, reflected the fact that the life insurer has greater sensitivity to further equity market declines than many of its peers.

IE