NU Online News Service, Aug. 2, 7:58 p.m. – John Hancock Financial Services Inc., Boston, is reporting $181 million in net income for the second quarter on $1.8 billion in revenue, down from $232 million in net income on $1.9 billion in revenue for the second quarter of 2000.
After-tax operating income, which excludes $4 million in restructuring charges and $14 million in losses on investments sold during the quarter, increased 8.5%, to $199 million.
The weak stock market and lower interest rates hurt results for some investment products and services, but corporate-owned life insurance, variable life insurance, fixed annuities and long-term care insurance sold well, Hancock says.
The Hancock unit that sells guaranteed investment contracts, group annuities and funding agreements generated $53 million in net income for the second quarter on $517 million in revenue, compared with $50 million in net income on $721 million in revenue for the second quarter of 2000.
Although revenue was down because of the sale of some operations once included in the unit, customers deposited $246 million more assets with the unit than they withdrew.
The Hancock unit that sells mutual funds and individual annuities earned $24 million in net income for the second quarter on $295 million in revenue, down from $32 million in net income on $299 million in revenue.
Consumers deposited $148 million more in fixed annuities than they took out, but they took $40 million more out of variable annuities than they put in.
The mutual funds lost $171 million more to redemptions than they took in through deposits and reinvestments.
The insurance unit earned $60 million in net income for the quarter on $808 million in revenue, compared with $66 million million on $779 million in revenue.
Statutory life insurance premium revenue fell 6.6%, to $498 million, because of decreases in traditional life and universal life sales.
Statutory revenue for individual long-term care insurance increased 17%, to $139 million, and statutory revenue group group long-term care insurance increased 9.9%, to $24.5 million.
Hancock has also made major changes in its investment portfolio.
The percentage of notes, redeemable preferred stock and other investments with fixed maturities available for sale increased to 95% of a $38 billion fixed-maturity portfolio June 30, up from 55% of a $31 billion fixed-maturity portfolio June 30, 2000.
The percentage of debt securities with credit quality ratings of A or higher decreased only slightly, to 47% of $37 billion June 30, from 48% of $30 billion a year earlier.
The percentage of debt securities with quality ratings of Caa or lower increased to 2% of the total, from 1.4%.