NU Online News Service, Nov. 15, 9:03 a.m. – Analysts at Moody’s Investors Service, New York, say losses on bonds and related investments and pressures to increase shareholder value could squeeze John Hancock Financial Services Inc., Boston.
Hancock is still one of the strongest, best-known U.S. life insurers, and it ended the third quarter with $4.9 billion in statutory capital. But the Moody’s analysts observe in a report on the company that it suffered $360 million in credit-related investment losses in 2001 and $339 million in credit losses during the first three quarters of 2002. Hancock could suffer $100 million in additional credit losses in the fourth quarter, and 2003 could be as bad as 2002, the analysts write.
The analysts also argue that Hancock, as a newly demutualized company, faces calls from its own investors to buy back its stock, increase use of borrowed money, sell assets, and take other measures that would increase its return on equity but reduce its financial flexibility.
Moody’s has responded to its concerns about Hancock by lowering Hancock’s senior unsecured debt rating to A3, from A2.