Thursday, March 09, 2006

Manulife Seeking "Sizable" Acquisitions

Reuters, Ed Leefeldt, 9 March 2006

New York, March 9 (Reuters) - Canadian insurer Manulife Financial Corp. has put the wraps on its acquisition of U.S. life carrier John Hancock and is now looking for new U.S. targets, said the head of its U.S. unit on Thursday.

"It's almost inevitable that (the insurance industry) will consolidate, and we intend to participate as a buyer," said John DesPrez III, president and chief executive of John Hancock Financial Services Inc., in an interview with Reuters.

By global standards, the U.S. life insurance business is fragmented with no company controlling more than a 6 percent share, he added.

DesPrez said likely targets would be in the life, variable annuity, long-term care, mutual fund or 401(k) industries. Manulife, protected by the Canadian government, can't be bought itself, he said.

Any purchase by Manulife would likely be "sizeable," the John Hancock CEO said, but he didn't rule out buying blocks of business from other carriers.

"We will do a deal that's in our market," said DesPrez, who heads Manulife's largest division and reports directly to Dominic D'Alessandro, president and chief executive of Manulife. "We would not buy a credit card company, a bank or a property and casualty insurer."

Even after the $10.4 billion acquisition of Boston-based John Hancock in April 2004, Manulife still has a $3 billion "warchest" for acquisitions, DesPrez said.

Manulife's stock closed on Thursday at $74.01 Canadian, near its all-time high. On the New York Stock Exchange, it edged down 27 cents to $63.80.

"We are disciplined," said DesPrez. "Our stock is rich but so are others. We're not going to do a stock deal where we trade our million-dollar dog for someone's half-a-million-dollar cat."

On Wednesday Prudential Financial Inc. bought Allstate Corp.'s variable annuity business for about $560 million, making it the fourth largest seller of these tax-advantaged savings vehicles.

"We think you'll see more of that," said DesPrez. "More second-tier players will realize they need size to compete and exit variable annuities."

DesPrez said the acquisition of John Hancock had been a key to Toronto-based Manulife's strategy because it gave the Canadian company a top-tier ranking in the United States, the world's largest insurance market.

Manulife moved from No. 14 in life insurance sales in 2003 to No. 3 in 2005, DesPrez said, and its stock has risen over 70 percent since the acquisition.