DBRS Morningstar Confirms Manulife Bank of Canada’s Long-Term Ratings at AA (low), Stable Trend

DBRS Ratings GmbH (DBRS Morningstar) confirmed the ratings of Manulife Bank of Canada (Manulife Bank or the Bank), including the Long-Term Issuer Rating at AA (low) and the Short-Term Instruments ratings at R-1 (middle). The trend on all ratings is Stable. Manulife Bank’s ratings reflect the expectation of timely internal support from The Manufacturers Life Insurance Company (MLI or the Parent; rated AA with a Stable trend by DBRS Morningstar).

KEY RATING CONSIDERATIONS
As a wholly owned, strategically important subsidiary of MLI, Manulife Bank’s ratings are primarily driven by the Financial Strength Rating of the Parent. As per DBRS Morningstar’s insurance methodology, the one-notch rating differential between MLI and Manulife Bank reflects the standard notching for a noninsurance subsidiary.

RATING DRIVERS
Given that Manulife Bank’s ratings are notched from MLI’s Financial Strength Rating (FSR) rating, any ratings upgrade of MLI would result in a ratings upgrade of Manulife Bank. Conversely, a downgrade of MLI’s FSR would also result in a ratings downgrade of Manulife Bank. In addition, any indications of a reduced ability or willingness of MLI to support Manulife Bank would result in a ratings downgrade.

RATING RATIONALE
Manulife Bank’s ratings reflect its position as an important name-bearing subsidiary that enables MLI to provide banking products and services to its clients. The Bank is an integral element of MLI’s strategy in Canada, with the mutually beneficial relationship between the two entities supporting their individual franchises. Manulife Bank is linked to its Parent through the significant integration of the Bank with MLI’s branding and distribution through MLI’s financial advisors network in Canada, as well as shared services and information technology systems. DBRS Morningstar notes that Manulife Bank is also well integrated into the overall risk management infrastructure of its Parent, which provides support to the ratings.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Rating actions on Manulife Financial Corporation (MFC) are likely to have an impact on this rating. ESG factors that have a significant or relevant effect on the credit analysis of Manulife Financial Corporation are discussed separately at https://www.dbrsmorningstar.com/issuers/7009.

There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/.

DBRS Morningstar notes that this Press Release was amended on 1 August 2022 to incorporate the job title of the Lead Analyst and the Chair.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Insurance Companies and Insurance Organizations (July 16, 2021; https://www.dbrsmorningstar.com/research/381667). Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (May 17, 2022; https://www.dbrsmorningstar.com/research/396929/).

The sources of information used for this rating include Morningstar Inc. and Company Documents; MFC 2021 Annual Report; MFC 2021 Environmental, Social, and Governance Report; MFC Q4 2021 and Q1 2022 Financial Results; Manulife Bank 2022 Q1 and 2021 Q4 Financial Performance; and Regulatory Disclosures. DBRS Morningstar considers the information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS Morningstar does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar's outlooks and ratings are under regular surveillance.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. DBRS Morningstar understands further information on DBRS Morningstar historical default rates may be published by the Financial Conduct Authority (FCA) on its webpage: https://www.fca.org.uk/firms/credit-rating-agencies.

The sensitivity analysis of the relevant key rating assumptions can be found at: https://www.dbrsmorningstar.com/research/400763.

This rating is endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Marcos Alvarez, Senior Vice President, Head of Insurance
Rating Committee Chair: Michael Driscoll, Managing Director, Head of NA FIG
Initial Rating Date: January 14, 2002
Last Rating Date: September 22, 2021

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