Standard & Poor’s Ratings Services today raised its credit and financial strength ratings on John Hancock Life Insurance Co. and its related U.S. operating companies and senior unsecured debt ratings on Hancock’s new parent, Manulife Financial Corp.

S&P also raised its ratings on the senior unsecured notes of John Hancock Canadian Corp.

“The ratings actions on John Hancock’s U.S. operating insurance, capital, and global funding companies reflect our revised view that these John Hancock-related companies, which were acquired in April 2004, should be viewed as core subsidiaries, rather than strategically important subsidiaries of Manulife Financial Corp.,” said Standard & Poor’s credit analyst Donald Chu.

When the deal was first announced in September 2003, Standard & Poor’s indicated that it did not expect that core status would be given to these subsidiaries for at least 12 months following the close of the transaction. Since that time, however, the company has progressed well in setting out its management reporting structure, reviewing its U.S. businesses and suite of products, executing its integration plan, achieving cost synergy targets and emerging revenue synergies, and optimizing its multichannel distribution network.

Manulife’s original cost synergy target will be raised to US$325 million from US$255 million by 2005, S&P says. All of Manulife’s products sold in the U.S. will be re-branded to John Hancock effective Jan. 1, 2005. The John Hancock operating companies now benefit from Manulife’s enterprise risk management practices, tighter financial discipline, and management accountability measures, it added.

“John Hancock’s product line complements Manulife’s three core products in the U.S. (individual life insurance, annuities, and group pension) and the combined operations now have a stronger market leadership position (top 10 or better) in U.S. individual life insurance, long-term care, fixed and variable annuities, and the small case 401(k) market,” the rating agency said. “Management does not have any plans to exit any of the recently acquired U.S. businesses. Although Manulife will continue to maintain separate legal entities for its U.S. life insurance operating companies, for legal, regulatory, and tax reasons its U.S. businesses are managed on the basis of individual
business lines, are becoming inextricably linked, and now account for about one-third of the group’s global operations.”

The outlook for Manulife and all of its subsidiaries is currently stable. S&P says the stable outlook on Manulife and its subsidiaries reflects its expectation that this group will continue to maintain its very strong operating performance, business franchise, and capital adequacy position. In addition, revenue growth and financial leverage are expected to remain appropriate for the current ratings. The investment portfolio is expected to remain well diversified, with no material changes in the underlying risk profile.