Hancock Increases 3Q Net 21% Despite Sharp Drop In Annuity Sales

October 30, 2003 at 07:00 PM

Share & Print

NU Online News Service, Oct. 30, 2003, 6:08 p.m. EST – John Hancock Financial Inc., Boston, says disciplined pricing and the improving credit climate helped it increase its net income 21% in the third quarter.

The company is reporting $191 million in net income for the quarter on $2.5 billion in revenue, up from $158 million in net income on $2.2 billion in revenue for the third quarter of 2002.

Because borrowers are doing a better job of making their payments, Hancock has cut its estimate of total 2003 credit losses to a range of $625 million to $650 million. Originally, Hancock feared losses might rise as high as $750 million.

At the annuity operations, lingering low interest rates hurt new sales. Sales dropped to $378 million, from $618 million, for fixed annuities and to $95 million, from $267 million, for variable annuities.

But profits were up for both product lines, in part because of disciplined pricing, Hancock says.

New life sales fell to $66 million, from $79 million. Sales of universal life insurance were up 16%, but sales of variable life insurance and corporate-owned life insurance were down more than 30%.

Sales of long term care insurance rose to $57 million, from $35 million, but LTC profits fell to $32 million, from $33 million, because of an increase in expenses, a drop in the yield on the LTC investment portfolio and a low policy lapse rate, Hancock says.

Hancock's share of profits from the new Federal Long Care Insurance Program joint venture with MetLife Inc., New York, increased to $2.6 million, from $300,000.

NOT FOR REPRINT