Manulife Exploring IPO or Spinoff for John Hancock Unit
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
Leslie Scism, Vipal Monga and Jacquie McNish were first to report that Manulife Financial Corp. of Canada is exploring a possible initial public offering or spinoff of its John Hancock Financial Services Inc. unit. According to sources, Manulife spent months working with investment bank Morgan Stanley to sell pieces or all of the unit before leaning to a possible IPO or spinoff. The insurer also discussed divesting some weak parts of the John Hancock unit. The Canadian insurer purchased John Hancock for $10.3 billion in 2004.
Manulife Had Purchased John Hancock for $10.3 Billion in 2004