Fitch Ratings has affirmed the ratings of Manulife Financial Corp. and its subsidiaries.

“MFC’s ratings reflect strong business and financial profiles, leading positions in North American insurance markets and growing operations in Asia,” Fitch says. “MFC’s large, diversified revenue and earning streams, driven by diverse product lines, distribution channels and assets under management, generate consistent, strong earnings and support capital and growth. Additional strengths are MFC’s good financial flexibility due to moderate financial leverage and a well-diversified investment portfolio.”

The rating agency reports that MFC’s strong 2005 operating performance compares favorably with other large global and North American peers. Fitch believes MFC’s scale in its chosen product segments has favorably affected profitability and distribution opportunities. “Manulife is a leader in the Canadian marketplace and continues to be a consistent, producer of significant earnings and revenues for MFC,” it explains. “In the United States, MFC has successfully leveraged the ‘John Hancock’ brand in U.S. markets with increased market share in life insurance and variable annuity sales in 2005.”

Fitch’s rating concerns include the very competitive markets within which MFC operates and risks associated with any potential large acquisition, although the company has proven its expertise in large, across borders transactions.

It believes MFC’s strong, risk adjusted capitalization provides robust support for MFC’s policyholder liabilities as well as buoyant growth. Fitch believes that MFC manages its capital with regards to tax and regulatory efficiency, maintaining adequate capital at the holding company level in support of target capital on a local company basis, such as John Hancock Life in the US.

Fitch expects MFC’s consolidated risk adjusted capitalization to remain very strong, but suggests that its minimum continuing capital and surplus requirement could decline modestly from current levels as the company redeploys capital through either share buybacks, an increase in common dividends or future acquisitions.

The outlook for the insurer’s rating is stable, which Fitch says reflects the positive trends in revenues and earnings of MFC for 2006, and consistency achieved through its diversified product lines and distribution channels. Run-rate returns on equity are expected to trend toward 15% with moderate stock buy backs and improving margins, it notes. Risk-adjusted capital is expected to decline towards the mid-point of Manulife’s target of 180% to 220%, but to remain adequate for the rating. With strong capital and expanding distribution Fitch believes MFC is well-positioned for future growth on an organic basis or through acquisitions.

In 2006, Fitch expects MFC to maintain a conservative financial capitalization profile and very strong fixed charge coverage.