Manulife mulls U.S. asset sales, rejects John Hancock IPO

TORON TO • Manulife Financial is weighing the sale of a number of U.S. insurance assets after conducting a strategic review of its U. S. operations including John Hancock, people familiar with the plans have told Reuters.

Canada’s biggest insurer has decided not to pursue an initial public offering or an outright sale of the John Hancock unit, after conducting the review, the people added.

Manulife is l ooking to monetize its less- attractive insurance assets in the U. S., according to the people who spoke on condition of anonymity as the information was not public. The sale of these assets, including variable annuity and long- term care businesses, could bring “several billions of dollars,” the people added, declining to give the precise value of the assets likely to be sold.

Manulife on Wednesday reported a decline in fourth- quarter earnings, reflecting lower insurance sales and slower growth at its wealth and asset management business. It said earnings per share, excluding one- off items, were $0.59 in the final quarter of 2017, compared with $ 0.63 in the same period the previous year. Analysts had on average expected earnings of $0.58 per share.

Chief executive Roy Gori told Reuters in November that Manulife was “looking at all options” for John Hancock. There has been speculation in recent years that the business could be sold.

North American insurance companies have been evaluating their businesses as they attempt to bolster earnings at a time when global interest rates have been at historical lows, with life insurance and annuity operations in particular focus.

Some have spun off their life insurance operations into separate units, as MetLife did with Brighthouse Financial last year, while a number of companies have sold off blocks of assets, in particular annuities, to private investors that aim to boost returns through cost-cutting.

Manulife acquired Boston- based John Hancock, one of the biggest life insurers in the U.S., for $15 billion in 2004.

It has in recent years made the high- growth Asia market a priority, and last year picked Gori, head of its Asian unit, to lead Manulife. After his appointment, Gori said Manulife has capital tied up in the U.S. that could be better used.

RBC analyst Darko Mihelic last year estimated the book value of Manulife’s U.S. legacy businesses, including its long-term care policies, to be $12.5 billion.

Instead of seeking a whole- business solution for John Hancock, Manulife plans to start offloading blocks of business in the next few months that it regards as unattractive from a returns perspective, according to the sources.