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

DBRS Limited (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 rating at R-1 (middle). All trends are 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 CREDIT 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.

CREDIT 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.

CREDIT RATING RATIONALE
Manulife Bank’s ratings reflect its position as an important name-bearing wholly owned subsidiary of MLI that enable it to offer 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 network of financial advisors in Canada, as well as shared governance, risk reporting, and IT systems. Manulife Bank is well integrated into the overall risk management infrastructure of its Parent, which provides support to the ratings. DBRS Morningstar also notes that in addition to the integrated framework, the Bank has a standalone liquidity risk management framework and a liquidity funding and contingency plan.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Credit rating actions on Manulife Financial Corporation are likely to have an impact on this credit rating.

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/416784 (July 4, 2023).

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 14, 2023; https://www.dbrsmorningstar.com/research/417109). In addition, DBRS Morningstar uses the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (July 4, 2023; https://www.dbrsmorningstar.com/research/416784) in its consideration of ESG factors.

The credit rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at www.dbrsmorningstar.com.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

DBRS Morningstar had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

This credit rating is endorsed by DBRS Ratings Limited for use in the United Kingdom, and by DBRS Ratings GmbH for use in the European Union, respectively. The following additional regulatory disclosures apply to endorsed ratings:

The last credit rating action on this issuer took place on July 29, 2022.

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 credit ratings are monitored.

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. For further information on DBRS Morningstar historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

Lead Analyst: Nadja Dreff, Senior Vice President, Head of Canadian Insurance, Global FIG
Rating Committee Chair: Michael Driscoll, Managing Director, Head of NA FIG
Initial Rating Date: January 14, 2002

For more information on this credit or on this industry, visit www.dbrsmorningstar.com.

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