RAM Ratings has reaffirmed Manulife Holdings Berhad’s corporate credit ratings of AA3/Stable/P1. The rating action it said reflects its expectation that extraordinary support will be forthcoming from Manulife Financial Corporation if needed, given the Group’s importance in MFC’s Asia-focused growth strategy.
The credit profile of the Group’s core insurance subsidiary, Manulife Insurance Berhad, and MHB’s structural subordination as a non-operating holding company is also rating considerations.
RAM adds that MIB’s credit metrics have stayed intact since its last review, with healthy capitalisation still a key rating strength. The Insurer’s regulatory capital adequacy ratio, which remained comfortably above its individual target capital level as at end-December 2021 and end-June 2022, is anticipated to be supportive of organic growth and cushion the effects of investment volatility.
Against the backdrop of economic recovery, the Insurer’s new business generation was still marginally weaker in 2021. On the investment front, MIB’s weaker yields are not unexpected in light of monetary policy normalisation and dampened equity valuations. As a result, MHB’s pre-tax profit plunged to RM6.2 mil in 1H fiscal 2022.
The small scale of MHB’s life insurance and asset management businesses remains a key rating constraint, limiting its ability to reap the benefits of scale in a competitive market. MIB had a 2.6% share of the life insurance industry’s total annualised
premium equivalent as at end-June 2022, while Manulife Investment Management (M) Berhad (the Group’s asset management unit) held a 2.6% share of the fund management industry’s assets under management as at the same date.
