A.M. Best Co. has affirmed the its ratings on The Manufacturers Life Insurance Co., John Hancock Life Insurance Co., Manulife Financial Corp., and their affiliates. The outlook for all ratings is stable.

The firm indicates that its ratings of Manulife, “reflect its leadership position in multiple global markets as evidenced by strong franchises in Canada and the United States and a growing presence in Asia, increasing profitability from its geographically diversified businesses, its strong capitalization and conservative reserving practices… Manulife’s product, operational and geographic diversification, as well as its leadership position in many of its markets, continues to provide the company with a growing revenue base and increased earnings. Furthermore, Manulife maintains a leadership position as a North American life and property/casualty retrocessionaire.”

In addition, Manulife has successfully integrated its 2004 acquisition of John Hancock Financial Services with its existing U.S. operations, achieving significant costs savings. “The introduction of new products to John Hancock’s distribution strengthened its leadership positions in the long-term care, variable annuity and life and small case pension businesses in the United States. In addition, these actions improved the overall profitability of its U.S. operations and increased market share,” it adds.

In the Canadian insurance market, A.M. Best says that MLI maintains a leadership position, and the merger of John Hancock’s Canadian subsidiary, Maritime Life, into MLI enhanced that position. “The guaranteed minimum withdrawal benefit incorporated into MLI’s segregated fund offering in late 2006 was a first in the Canadian market and demonstrated Manulife’s ability to incorporate product design common in the U.S. Market,” it says.

“Partially offsetting these strengths is the equity market risk that Manulife incurs through its large portfolio of investment linked products. Variable products expose Manulife to equity market fluctuations, which it currently does not hedge,” the rating agency notes. “Ongoing low interest rates have resulted in net outflows in its fixed products in the United States, and A.M. Best expects competition to remain fierce in Manulife’s domestic and foreign markets. Finally, the long-term care market in the United States has been subject to adverse claims experience primarily on older blocks of business, which has led to reserve strengthening for many carriers.”