Report: John Hancock Could Soon be Seller or Buyer

September 26, 2003 (PLANSPONSOR.com) - An announcement could be forthcoming soon about a potential deal to buy John Hancock Financial Services - possibly by Manulife Financial Corp. - or for Hancock to acquire someone else, according to a news report.

The Boston Globe reported that John Hancock was in the “advanced stages” of talks with a potential buyer with Manulilfe, Canada’s second-largest life insurer, listed as the prime candidate for the acquisition. Hancock has been in touch with its directors to find out when they can attend a special board meeting – presumably to ratify such a deal, unnamed sources told the newspaper.

The Globe laid out two potential scenarios:

  • Hancock as seller . By talking so long and so openly about selling the company, Hancock chief executive David D’Alessandro has all but invited bids. The Hancock brand would be just the ticket for Manulife’s stated goal of a major US expansion. Plus Manulife is already building a new US headquarters in Boston. In recent months Hancock has also talked with MetLife Inc., the second largest US life insurer, the unnamed executives told the newspaper. In 1996 MetLife bought Boston’s other large life insurer, New England Financial. In June MetLife said it was buying Hancock’s group life business.
  • Hancock as a buyer . Again, Hancock has been exploring at least two opportunities, said the executives familiar with the strategy: Buying a piece of General Electric Co.’s huge insurance business (last year’s revenue: $23 billion) or Travelers Life & Annuity Co. (2002 net income: $776 million) from giant Citigroup Inc. In either case, Hancock would buy the insurance operations of the company involved by issuing new stock, giving GE or Citigroup a major stake in Hancock. Combined, GE and Hancock would be the biggest player in the country in long-term-care insurance.

Talks With Fleet and Pru

But the bottom line is that D’Alessandro has been looking hard for a deal that works. In May, Hancock and FleetBoston Financial explored combining the two firms to produce a big Boston-based financial services player and Hancock had also held discussions over an eight-month period with Prudential Financial Inc., the Globe said.

Almost from the day Hancock went public in 2000, D’Alessandro has talked about the need to get bigger or sell. While Hancock is the sixth largest publicly traded life insurer, it is tiny in the worldwide financial services industry.

Manulife’s chief executive has been looking for US acquisitions after dropping to number two in Canada following takeovers by his leading rivals. Sun Life Financial Inc., Canada’s largest insurer, bought Clarica Life Insurance Co. last year, while Great-West Lifeco Inc. completed its purchase of Canada Life Financial Corp. last summer.

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