Canada’s largest life insurer may be about to offload its US operations
In what has already been a transformative year for Manulife, reports have surfaced that the insurance giant is now laying the groundwork for divesting its US operations.
This past May, Canada’s largest life insurer announced its CEO Donald Guloien was stepping down in October to be replaced by the current general manager of Manulife's Asia Division, Roy Gori.
The succession plan appears further evidence of the firm’s increased focus on its Asian business, which has become a clear priority under Guloien’s leadership.
In contrast is Manulife’s US business, John Hancock, which has frustrated shareholders in recent years for subpar returns, according to a report in The Wall Street Journal published last week. The same report noted that the company is now considering either a spinoff or an IPO of John Hancock. Manulife is yet to comment publically on the prospect of a divesture, simply stating that: “As a matter of policy, Manulife does not comment on market rumours or speculation.”
While the US-arm of the business may have underwhelmed in terms of earnings, it still represents a significant part of the Manulife’s overall operations.
John Hancock accounts for 56% of total assets under management and 46 % of total premiums and deposits for Manulife. It delivered $1.13 billion in net income in 2016, but this was down 22% on 2015’s total. This adds credence to the belief that the parent company is mulling a divesture.
Most recently John Hancock named Michael Doughty as general manager, replacing the outgoing Craig Bromley in the position.
Manulife acquired the Boston-based John Hancock in 2003 for $15 billion, one of the largest corporate takeovers in Canadian history. The deal doubled the size of the firm and made Manulife one of the top life insurers in the world. Like many of its peers, the financial crisis and its aftermath was not kind to either Manulife or John Hancock, and both have moved more into asset management in recent years. For insurance, Asia, with its burgeoning middle class, has emerged as the firm’s key growth driver with operations in Hong Kong, Japan, Singapore, the Philippines, Thailand, Malaysia, Indonesia, Taiwan, Vietnam and Cambodia.
Manulife had record insurance sales on the continent in 2016, an increase of 27% on 2015’s levels. Core earnings for the Asian division stood at US$1,129 million for 2016, compared with US$963 million in 2015.
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This past May, Canada’s largest life insurer announced its CEO Donald Guloien was stepping down in October to be replaced by the current general manager of Manulife's Asia Division, Roy Gori.
The succession plan appears further evidence of the firm’s increased focus on its Asian business, which has become a clear priority under Guloien’s leadership.
In contrast is Manulife’s US business, John Hancock, which has frustrated shareholders in recent years for subpar returns, according to a report in The Wall Street Journal published last week. The same report noted that the company is now considering either a spinoff or an IPO of John Hancock. Manulife is yet to comment publically on the prospect of a divesture, simply stating that: “As a matter of policy, Manulife does not comment on market rumours or speculation.”
While the US-arm of the business may have underwhelmed in terms of earnings, it still represents a significant part of the Manulife’s overall operations.
John Hancock accounts for 56% of total assets under management and 46 % of total premiums and deposits for Manulife. It delivered $1.13 billion in net income in 2016, but this was down 22% on 2015’s total. This adds credence to the belief that the parent company is mulling a divesture.
Most recently John Hancock named Michael Doughty as general manager, replacing the outgoing Craig Bromley in the position.
Manulife acquired the Boston-based John Hancock in 2003 for $15 billion, one of the largest corporate takeovers in Canadian history. The deal doubled the size of the firm and made Manulife one of the top life insurers in the world. Like many of its peers, the financial crisis and its aftermath was not kind to either Manulife or John Hancock, and both have moved more into asset management in recent years. For insurance, Asia, with its burgeoning middle class, has emerged as the firm’s key growth driver with operations in Hong Kong, Japan, Singapore, the Philippines, Thailand, Malaysia, Indonesia, Taiwan, Vietnam and Cambodia.
Manulife had record insurance sales on the continent in 2016, an increase of 27% on 2015’s levels. Core earnings for the Asian division stood at US$1,129 million for 2016, compared with US$963 million in 2015.
Related stories:
Speculation rife Manulife is bidding for Thai life insurer
Manulife names new successor as CEO announces retirement
