John Hancock board approves conversion to public ownership

CEO says insurer plans to step up pace of acquisitions

Insurance

September 02, 1999|By BLOOMBERG NEWS

BOSTON -- John Hancock Mutual Life Insurance Co.'s board approved yesterday plans to convert the sixth-largest U.S. policyholder-owned life insurer to a publicly traded company, a move that will help it make acquisitions and raise capital.

Boston-based John Hancock is one of a handful of large U.S. mutual insurers making the switch to public ownership. Once it goes public, the company will be able to issue shares to raise money or use its stock as currency to purchase other financial-services companies. An initial stock sale is expected by the end of March.

"We think there's a lot more consolidation to come within the insurance industry over the next few years, and we would like to be an acquirer of other insurance companies," Chief Executive Officer Stephen L. Brown said. "We're also interested in asset management and mutual fund firms if the price is right."

The insurer has been snapping up rivals, agreeing in April to buy Aetna Inc.'s Canadian insurance business for about $300 million in cash.

John Hancock will distribute stock or cash to 2.8 million people who own its life and health insurance policies, and retirement savings plans called annuities.

Analysts said the company could be worth close to $10 billion on the stock market, meaning that shareholders would receive an average of $3,571 each, though the amount could differ depending on premiums the customer has paid.

The insurer announced plans to go public last year. Prudential Insurance Co. of America and Metropolitan Life Insurance Co., the two largest U.S. life insurers, have also made plans to convert.

John Hancock's plan to go public requires approval by policyholders in a vote scheduled for Nov. 30. The new public company would be called John Hancock Financial Services Inc. and trade on the New York Stock Exchange under the symbol JHF.

The conversion plan approved yesterday prohibits the insurer from selling itself for two years after it becomes a public company and requires that any takeover offer in the third year be approved by the John Hancock board and the Massachusetts commissioner of insurance.

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