The acquisition of Boston insurer John Hancock is different from the other corporate mergers that have swallowed up some of the largest companies in the city, the chief executive of Hancock's new parent, Manulife Financial Corp. of Toronto, told business leaders yesterday.
''I know it hasn't been easy for some people to see a local icon like John Hancock be acquired by a relative stranger, and a foreigner to boot," Manulife's chief, Dominic D'Alessandro, said in a speech to the Boston College Chief Executives' Club. ''And the press tends to lump Manulife in with those other out-of-town buyers who some say are stripping Boston of its flagship businesses."
He did not name the other mergers that he was referring to, but they likely include Bank of America Corp.'s acquisition of FleetBoston Financial Corp. and Procter & Gamble Co.'s proposed merger with Gillette Co.
D'Alessandro said that Manulife's acquisition of Hancock is different because it was motivated primarily by growth into new products, not cost cuts, and that Manulife plans to ''grow noticeably" in Boston. He also said the merger involved few job losses. Hancock has said previously that it laid off about 240 employees in Boston, and that 90 more left voluntarily or retired. It now employs 3,900 people in the city. Hancock also is moving an annuities distribution unit, Manulife Wood Logan, to Boston from Connecticut, which is expected to bring about 100 more jobs here.
Boston is the headquarters for Manulife's US operations, which represents half the insurer's business. Manulife operates all its US businesses under the John Hancock name. The $10.9 billion merger was announced in 2003 and closed last year.
Before the merger, Manulife also had its US headquarters in Boston. It built a gleaming office building on the South Boston waterfront that is now renamed after John Hancock. The Canadian flag and the American flag are posted outside.
There may be more opportunities for Manulife to grow in the United States as it goes forward, D'Alessandro said. The US insurance market remains fragmented, with more than 1,100 life insurance companies. The top five players in America control less than one-fourth of life insurance sales, D'Alessandro said. In other developed countries, including Canada, the top five players dominate the market, he said.
As a result, Manulife sees an opening to acquire other insurance and mutual fund firms, he said. ''This is a market crying out for consolidation," D'Alessandro said. ''A well-capitalized company like mine is in an excellent position to help things along, especially now using the powerful John Hancock brand."
Separately, D'Alessandro said America's legal system costs companies substantial amounts of money and is a drag on the US economy. He also criticized stricter corporate reporting requirements mandated under the Sarbanes-Oxley Act, and said the regulations are extremely costly but ''relatively meaningless" as a deterrent for corporate abuses. Instead of new regulations, he said, he would prefer better enforcement of existing ones.
''Paperwork has rarely discouraged anyone truly intent on fraud," he said.
Sasha Talcott can be reached at email@example.com.