07 November 2006

Manulife Subsidiaries Upgraded to 'AAA' by S&P

BMO Capital Markets, 7 November 2006

Standard and Poor’s has announced an upgrade of Manulife Financial Corp. and its related subsidiaries. Manulife Financial’s senior unsecured debt rating improves to AA from AA-, and Manufacturers Life Insurance Co. is now attributed a financial strength rating of AAA. The rating agency indicated that the upgrade was attributable to Manulife’s leading and well-diversified operations in Canada, the U.S., Hong Kong, and other Asian operations including Japan. S&P also highlighted the insurer’s strong capital position, balanced investment portfolio, strong risk management culture, and MFC’s strong and stable operating performance as factors that support this positive rating action. Standard and Poor’s expects Manulife to maintain a leverage ratio at less than 25%. Currently, Manulife is very conservatively leveraged and had a debt to total capital ratio of 17.6% at Q3/06. S&P’s decision to move ahead with an upgrade is of little surprise given the very strong operating results delivered by Manulife over the past four reported quarters since the outlook on the credit was revised to positive. Given its strong ratings, and our expectation that credit fundamentals will remain solid, Manulife remains our favourite credit among large financial services credit. Manulife credit continues to trade at a modest premium to large banks, and we believe that spreads will prove quite defensive in a more difficult environment for credit.