Standard & Poor’s Ratings Services has affirmed its credit and financial strength ratings on Manulife Financial Corp.’s insurance operating companies, the U.S.-based operating insurance companies of John Hancock Financial Services Inc., and on its Halifax-based subsidiary, Maritime Life Assurance Co.

The outlooks on John Hancock’s operating subsidiaries have been revised to positive from stable.

The ratings actions follow the announcement that Manulife intends to purchase John Hancock for approximately $15 billion in an all stock transaction. It notes that up to $3 billion in Manulife common shares may be repurchased by Manulife using liquid assets currently maintained on its balance sheet. And, that no additional debt, preferred shares, or hybrid securities will be issued to finance this transaction.

“Manulife’s intended purchase of John Hancock will result in the creation of an insurance organization that ranks among the top five in North America as measured by assets, among the top 10 globally, and it will have significant product and geographic diversification,” said Standard & Poor’s credit analyst Donald Chu. Each organization held approximately US$100 billion in total assets as of June 30. It is expected that John Hancock would become a direct subsidiary of Manulife Financial Corp.

Standard & Poor’s says that it sees several benefits from this transaction. Manulife will solidify its U.S. franchise with the highly recognized John Hancock brand name. It will not only gain scale and expense savings through the acquisition of Hancock’s U.S. life insurance business (in-force of approximately US$148 billion), but also new product and distribution capabilities.

New product depth provided by John Hancock will include its meaningful presence in U.S. fixed-rate annuities, U.S. long-term care, and global institutional spread-based products. S&P also say the acquisition increases Manulife’s scale in a quickly consolidating Canadian insurance marketplace by adding Maritime Life.

The John Hancock organization is expected to benefit from Manulife’s capital strength and associated financial flexibility, more meaningful global operations, and strong management and business lines resources.

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