A.M. Best Co. has affirmed the group financial strength rating of A++ (Superior) for The Manufacturers Life Insurance Co., and its U.S. subsidiaries: Manulife Reinsurance Corp. (U.S.A.), The Manufacturers Life Insurance Co. (U.S.A.), The Manufacturers Life Insurance Co. of America, The Manufacturers Life Insurance Co. of North America and The Manufacturers Life Insurance Co. of New York.

According to the ratings agency, the rating reflects Manulife’s established presence in multiple markets, robust profitability from its geographically diversified businesses, conservative reserving practices and strong capitalization.

A.M. Best says that the group maintains a superior franchise as a top provider of financial protection products and wealth management services in Canada, the United States and Asia.

A.M. Best notes Manulife will maintain a significant market presence in North America due to its strong name recognition, extensive distribution, enhanced efficiency through expense reductions and targeted acquisitions.

The ratings agency says Manulife has achieved superior returns by executing a balanced strategy of organic growth through product innovation combined with key acquisitions and strong investment performance.

It notes that Manulife’s market share in products such as small-case group benefits and critical illness has been bolstered by the recent Zurich Life (group business) and Commercial Union transactions. Moreover, Manulife purchased the in-force business of Daihyaku Mutual, adding scale and earnings power to its operations in Japan.

Although the purchase represents a significant investment, A.M. Best says it continues to view Manulife’s risk-adjusted capitalization as strong, supported by steady earnings growth and a high-quality investment portfolio.

A.M. Best believes the consistent flow of earnings from Manulife’s core businesses is sustainable and is enhanced by the group’s operational and geographic diversification as well as its solid position in numerous markets have somewhat insulated the company from wide fluctuations in revenues and earnings.

However, it observes that since a considerable amount of Manulife’s earnings is derived from wealth management business, the firm’s operating results may be impacted by a prolonged equity market correction. Nevertheless, A.M. Best believes that Manulife’s variable annuities have performed well through the recent market volatility by exhibiting positive net sales in each of the last five quarters.

Manulife’s exposure to the weak Japanese economy, may cause earnings volatility if new business production differs materially from expectations. Nonetheless, in A.M. Best’s opinion, Manulife’s strong management team and prudent business strategy position the company well to prosper when Japan’s economic climate improves.