Moody’s Investors Service has placed on review for possible upgrade the ratings of John Hancock Financial Services, Inc.
Moody’s also placed on review the insurance financial strength and other ratings of certain life insurance company subsidiaries led by John Hancock Life Insurance Co.
Moody’s said that the review is prompted by positive changes that have occurred since the April 28, 2004 acquisition of John Hancock by Manulife Financial Corp.
The rating agency noted that with this acquisition, Manulife is now among the largest and most diversified life-insurance operations in the United States.
The combined Manulife US operations have major market positions in life insurance, fixed, and variable annuities, as well as in 401(k) savings plans, long-term care, and institutional investment products.
Moody’s said that any rating change would be likely limited to one rating notch. A one-notch upgrade would equalize the Aa2 IFS rating of John Hancock Life Insurance Co. with that of its sister company, John Hancock Life Insurance Company (USA), which was the primary US-based subsidiary of Manulife prior to the John Hancock acquisition.
Moody’s pointed out that the favorable changes occurring at John Hancock and its operating subsidiaries since the merger include the following:
- an improved risk profile in the investment portfolio, particularly regarding the assumption of less credit risk and an orientation towards a more liquid investment profile;
- the virtual elimination of the issuance of
institutional investment products, such as funding agreement-backed notes and guaranteed investment contracts; - a comprehensive integration of the management, distribution systems, and products of the two former independent U.S. operations;
- substantial cost savings arising from this combination; and
- extensive cross-selling of products through the combined distribution channels.