Under pressure from a challenging economic environment, John Hancock Life Insurance Co. has pulled back on its annuity distribution and expects to withdraw an array of fixed, variable and immediate annuities.
Notice of the change was given to most John Hancock broker-dealer distributors this month, as the insurer has decided to sell through only a couple of firms. Executives at broker-dealers said that they were told the change will take effect in mid-December.
A memorandum from John Hancock to its distributors indicated that the insurer will pull its Venture 4 Series, 7 series and Frontier variable annuities.
The insurer's market-value- adjusted fixed annuities also will be withdrawn, including its JH Choice, JH Signature and Inflation Guard, which was released only in late September. The insurer's Essential Income immediate annuity also is being pulled.
John Hancock will process new business and transfers into these annuities if they receive the paperwork by Dec. 16.
John Hancock spokeswoman Beth McGoldrick declined to comment on the timing of the change but wrote in an e-mail: “Going forward, our annuities will be sold through a narrow group of key distribution partners.”
Edward Jones is among the firms to make the short list and will continue selling John Hancock's A-share variable annuity.
“We were told they would be trying to focus their distribution on a few key partners, and we were reassured that it wouldn't affect us,” said Merry Mosbacher, a principal in Edward Jones' insurance marketing unit.
News of the change follows closely on the heels of a decision by John Hancock to cut 116 jobs in its annuity business.
Ms. McGoldrick said that within that group, 36 wholesalers were let go March 11. Previously, 20 wholesalers covered mutual funds and 30 focused on VAs. With the layoffs, 14 wholesalers remain to support both product families. Ms. McGoldrick confirmed that the layoffs equal about 3% of the insurer's workforce.
She added that the cuts were part of the insurer's “restructuring of its annuity business and a streamlining of its infrastructure.”
Some of the workers were moved to
John Hancock's mutual funds and 401(k) businesses, units that the insurer expects to expand.
The company is still actively hiring and has about 110 open positions, Ms. McGoldrick said.
Donald Guloien, chief executive of John Hancock's Canadian parent, Manulife Financial Corp., had noted during an earnings call Nov. 3 that it sought to moderate its exposure to the VA business.
“Variable annuities ... are a product that we don't want to have a gigantic exposure to, moving forward,” he said. “Moderate amounts are fine, but I think any sensible person would attenuate exposure to those products, given some of the risks they expose one to.”
TOUGH THIRD QUARTER
The insurer reported a third-quarter loss of $1.27 billion. Slumping interest rates and rocky markets reduced earnings by $1.78 billion, $900 million of which came from an increase in VA hedging liabilities.
John Hancock came in 15th place among all VA insurers for market share, according to FBR Capital Markets.
Its decision to step back from the VA market follows exits by Genworth Financial Inc. and ING Groep NV.
Massachusetts Mutual Life Insurance Co., though it continues to sell variable annuities, had also suspended the sales of some benefit riders following the crisis.
Ameriprise Financial Inc. last year decided to restrict VA distribution to its own financial advisers.
Even the most successful VA players — MetLife Inc. and Prudential Financial Inc. — have reined in product features to temper demand.
Email Darla Mercado at dmercado@investmentnews.com
