Manulife Exploring IPO or Spinoff for John Hancock Unit
July 13 2017 - 12:55PM
Dow Jones News
By Leslie Scism, Vipal Monga and Jacquie McNish
Canadian insurer Manulife Financial Corp. is exploring a
possible initial public offering or spinoff of its John Hancock
Financial Services Inc. unit, according to people familiar with the
plans.
If it proceeds with a breakup of the Toronto-based company,
Manulife would be the latest life insurer to hive off a large part
of its business. Industry executives have often cited the impact of
low interest rates and the damage they do to some of the insurers'
basic products. A move by Manulife would follow rival insurers
MetLife Inc., and AXA SA in shedding large U.S. operations built
around sales of life insurance, retirement-income annuities and
other savings products to American families.
Manulife has been under pressure from some of its shareholders
to sell John Hancock after years of disappointing returns from the
U.S. unit, according to two people familiar with the company.
Manulife initially jumped into the U.S. life-insurance market
with the purchase of John Hancock in 2004. The Boston-based
insurer, which was founded in 1862, was bought for roughly $10.3
billion. The purchase was announced with great fanfare as the
keystone for the Canadian insurer's global strategy to expand in
the U.S. But after years of disappointing returns from the
business, which recently accounted for nearly 60% of Manulife's
assets under management and administration, the Canadian insurer is
instead focusing on expanding in Asia.
As recently as two years ago, Manulife reviewed plans that
included a possible spinoff of the U.S. business. That proposal was
dropped at the time.
Manulife's potential IPO or spinoff follows some months of work
by investment bank Morgan Stanley to sell pieces or all of the John
Hancock unit, one person said.
In recent analyst and investor events, Manulife executives have
discussed divesting some weak parts of John Hancock. These included
at least some blocks of long-term-care insurance and
lifetime-income guarantees, according to a company presentation.
Those are among the products harmed the most by low interest rates.
Long-term-care policies typically pay for in-home aides or nursing
homes. John Hancock quit selling long-term-care policies to
individuals last year.
Roy Gori, who will become chief executive in October after
current CEO Don Guloien retires, said during a session with
investors in Hong Kong last month that he was "impatient" to shed
the businesses.
Write to Leslie Scism at leslie.scism@wsj.com, Vipal Monga at
vipal.monga@wsj.com and Jacquie McNish at
Jacquie.McNish@wsj.com
(END) Dow Jones Newswires
July 13, 2017 12:40 ET (16:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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