Moody’s Investors Service changed its rating outlook on Manulife Financial Corp. from negative to stable, and affirmed its insurance financial strength ratings.

The rating agency notes that the change to Manulife’s outlook follows the completion of Manulife’s $2.5-billion issuance of common equity.

“Moody’s based its decision to stabilize Manulife’s outlook on the company’s efforts over the past year to bolster its capitalization and financial flexibility in the face of a still sizable sensitivity to a decline in equity markets,” said Moody’s senior vice president, Peter Routledge. He added that since the end of 2008, the company has raised $4.8 billion in common equity and $1.8 billion in other Tier 1 capital instruments while cutting its common share dividend by 50%.

“The capital raises have bolstered the company’s ability to absorb a substantial decline in equity markets and signaled senior management’s clear commitment to maintaining a high level of financial flexibility. Meanwhile, the dividend cut will enable Manulife to retain a greater share of its earnings, assuming a return to profitability in 2010,” he added.

Moody’s also cited the depth and diversity of the Manulife’s life insurance franchises as another driver underlying the outlook change. The key risk to Manulife’s ratings and credit profile continues to be its susceptibility to declines in U.S., Canadian, and Asian equity markets.