S&P Affirms Manulife -- International -- Ltd. 'AA+' Rtgs.

Business Editors

HONG KONG--(BUSINESS WIRE)--Sept. 24, 2003

Standard & Poor's Ratings Services said today that it had affirmed its 'AA+' long-term counterparty credit and insurer financial strength ratings on Hong Kong-based Manulife (International) Ltd. (MIL).

The ratings reflect the company's status as a core subsidiary of its parent, Manufacturers Life Insurance Co. Manulife, AA+/Stable/A-1+), one of the leading financial services companies in Canada. They also reflect MIL's very strong market position in Hong Kong, and its excellent financial profile, which is characterized by superior capitalization, very good liquidity, and satisfactory earnings. These significant strengths are, however, partially offset by the company's volatile investment performance as a result of its relatively high exposure to equity.

The ratings on MIL's parent, Manulife, reflect the Manulife group's very strong and geographically diversified business positions in Canada, the U.S., and Asia; extremely strong capitalization and operating performance; and an accomplished management team. Partially offsetting these strengths is intense competitive pressure in most insurance markets in which Manulife competes.

MIL has a strong position in Hong Kong's highly competitive life insurance market. In 2002, it had a market share of 10% of the territory's individual life insurance business in terms of inforce premiums and 22% of retirement funds under management by life insurers in Hong Kong. The company's main distribution channel is its own sales agent force, which generates good quality business. MIL is the second-largest life insurer in Hong Kong. It has a branch office in Macau and a joint-venture life insurance operation in mainland China, Manulife Sinochem Life Insurance Co. Ltd.

MIL's financial profile is very strong. The company's capitalization remains extremely strong, despite the redemption of its preference shares. The company's balance sheet is also supported by its good liquidity. MIL's management strategies are prudent and sound, and are reflected in its solid financial performance and operational management.

MIL's earnings remain sound, primarily supported by its profitable individual life business. In 2002, the company reported a net profit of Hong Kong dollar (HK$) 764.2 million despite a fall in investment income. Its pretax return on average assets stood at 2.1%, a level that compares favorably with the returns of most of its domestic peers.

MIL's investment portfolio is of good quality and consists primarily of high quality bonds and listed equity. However, the company's high exposure to equity investments has introduced some volatility to its investment performance. As a result, MIL's investment performance has deteriorated for the past three years because of unfavorable market conditions.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Credit Ratings Lists. Standard & Poor's ratings appear alphabetically.