RAM Ratings Affirms Manulife Holdings' AA2/Stable/P1 Ratings

KUALA LUMPUR, Nov 18 (Bernama) -- RAM Rating Services Bhd has affirmed Manulife Holdings Bhd’s corporate credit ratings (CCRs) of AA2/Stable/P1.

The ratings are aligned with the group’s overall credit strength, as Manulife remains debt-free at the holding company level, said RAM Ratings in a statement today.

This credit strength is largely anchored by the financial profile of its core insurance subsidiary, Manulife Insurance Bhd.

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“The ratings also benefit from an uplift, reflecting RAM Ratings assessment of potential parental support. This considers Manulife’s strategic importance to its parent company, Manulife Financial Corp (MFC), given MFC’s focus on Asia-centric growth and the strong relationship between the two entities,” the agency said.

On a stand-alone basis, it said Manulife Insurance has a healthy capital position and sound insurance, investment and liquidity risk management.

Manulife Insurance’s modest market presence and moderately high equity securities exposure, however, partially offset its credit strength.

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“As part of the larger group, Manulife can leverage MFC’s established branding and management support. MFC’s technical expertise in product development and investment management also allows the group to innovate and offer products aligned with market demand,” it said.

Meanwhile, Manulife Insurance’s capital adequacy ratio remains healthy, significantly exceeding its target capital level.

Manulife Insurance’s business growth continues to gain from its multi-channel distribution strategy.

The renewal of its bancassurance partnership with Alliance Bank Bhd for another 15 years in 2023 fuelled new business volumes, which increased 12.4 per cent in the financial year (FY) of December 2023 and 51.2 per cent in the first half (1H) of FY December 2024.

Furthermore, the small scale of Manulife’s life insurance and asset management businesses is still a key rating constraint.

Manulife Insurance’s share of the industry’s total annualised premium equivalent stood at 2.6 per cent as at end-June 2024, while Manulife Investment Management (M) Bhd, the group’s asset management unit, held a 2.7 per cent share of the sector’s assets under management on the same date.

Stronger investment returns from more favourable market conditions pushed Manulife’s pre-tax return on assets up to 1.7 per cent in FY December 2023 and 2.0 per cent (annualised) in 1HFY December 2024 (FY December 2022: 0.8 per cent).

“The current market environment is expected to be supportive of the group’s profitability in the second half.

“Prospects for achieving sustainable long-term improvements in profitability, however, will depend on the group scaling up, which is essential for better expense management and risk pooling,” Ram Ratings added.

-- BERNAMA