John Hancock Financial Services Inc. announced plans to sell its group life insurance business to MetLife Inc. yesterday, although neither company would say how much money traded hands or what the terms of the deal were.
Regardless, the sale fits Hancock's recent pattern of dumping everything that is not part of its internally defined "core business." Hancock chief executive David D'Alessandro said in a statement that group life insurance is "immaterial to our earnings," and that the sale would not impact the company's earnings projections for the year.
The business, which involves selling life policies to corporations or organizations en masse, accounted for approximately 2 percent of Hancock's $8.45 billion in revenue last year. The company has 239 clients in the group business, with about $150 million in net written premiums.
MetLife, in contrast, has thousands of group life clients and $4.5 billion in net written premiums.
"It's not a material transaction for either company, but it shows a discipline [on the part of Hancock] that you really like to see in companies," said Vanessa Wilson, an industry analyst with Deutsche Bank Securities. "Hancock had no scale in this business, so it's good to see them do spring cleaning."
Hancock, the nation's seventh-largest publicly traded life insurer, and the company with its name on Boston's tallest office tower, has been moving aggressively to streamline its operations since it became a public company in January 2000. Before then, the company had been a mutual insurer, which means it was owned by policyholders and operated exclusively for their benefit.
The MetLife deal comes just one week after Hancock said it would sell 131 Clarendon St., in Boston, which houses the Hard Rock Cafe, and an 18,000-square-foot surface parking lot next door. The Related Cos., based in New York, and Beal Cos. of Boston, agreed to purchase the property for about $30 million, The Boston Globe reported at the time. And three months ago, Hancock sold its signature Boston office tower and two nearby buildings to Beacon Capital Partners for $910 million. Hancock is leasing back space for its headquarters. In January, meanwhile, the company agreed to pay $90 million to buy 48,000 fixed universal life insurance policies from Worcester-based Allmerica Financial Corp.
"They sell the home office building, they buy the Allmerica business for a song, then they get rid of this annoying little piece of their business," Wilson said of yesterday's deal. "Every company says they want to be `focused,' but you'd be amazed at how many companies I see that wouldn't have taken these steps."
The deal announced yesterday is expected to close this year, pending regulators' approval. Hancock's stock closed at $30.81, down 28 cents.
Both Hancock and MetLife said the sale would be "earnings neutral," which means it would not have an impact on this year's financial results.
Wilson, though, said the transaction is a smart move regardless of the short-term financial considerations for the Boston insurer, because it allows managers to concentrate on more productive areas.
Hancock declined to make anybody available to explain its rationale for the sale. In a statement, though, D'Alessandro said it "is a continuation of a strategy we began several years ago to focus resources on businesses in which we can have a leadership position, including individual life insurance, group, and individual long-term care insurance, annuities, guaranteed and structured financial products and institutional investment management."
Scott Bernard Nelson can be reached at email@example.com.