Closed Block Deal Covers 1.3 Million Policies
and More Than $25 Billion in Face Amount
December 24, 2014 -NEW YORK–(BUSINESS WIRE)–New York Life, the largest mutual life insurance company in the United States, announced today that it has signed a definitive agreement to acquire through reinsurance 60 percent of John Hancock Financial’s closed block comprised primarily of participating whole life insurance. The block of 1.3 million policies was closed in connection with John Hancock’s demutualization in 2000, and includes more than $11 billion in liabilities. Through a reinsurance arrangement, New York Life will assume $7 billion of those liabilities. The policies have a face amount of more than $25 billion. John Hancock is the U.S. division of Manulife Financial Corporation.
The reinsurance agreement with John Hancock is part of New York Life’s strategy to robustly grow its core book of individual life insurance business, which is fundamental to the company’s unsurpassed financial strength ratings. New York Life’s NYL Investors, LLC unit, which oversees the company’s $185 billion general account, will manage $10.5 billion in new assets. John Hancock will continue to administer the closed block, paying claims and dividends.
“This agreement is a strategic complement to the strong year over year organic growth we achieve through our career agency system, bringing a significant infusion of high-quality, whole life insurance reserves,” said Ted Mathas, Chairman and CEO of New York Life.
High grades from all rating agencies
“Sustaining a large, healthy and growing block of life insurance is a key driver of our superior financial strength, which differentiates New York Life in the marketplace and brings peace of mind to millions of policyholders who rely on us to be there when they need us most,” added Mr. Mathas. Currently, New York Life is one of only two life insurance companies with the highest possible financial strength ratings from all four major ratings agencies.
Under a separate agreement announced today, New York Life Investment Management will sell New York Life Retirement Plan Services (RPS), excluding the stable value business, to John Hancock, which will merge RPS with John Hancock Retirement Plan Services. The combined business will cover 55,000 retirement plans across the country, helping more than 2.5 million Americans prepare for retirement. John Hancock provided details of this transaction in a separate release issued today. New York Life’s stable value business, which is backed by the company’s financial strength and investment expertise, will remain at New York Life as a division of Institutional Annuities.
“Together these transactions reflect another step in our business strategy to maximize value for our policyholders. Upon closing, New York Life will be focused on a select group of complementary businesses: life insurance and annuities, which are core to our mission and areas where we are a clear market leader; and third-party retail and institutional asset management, which provides earnings diversification and supports our dividend to policyholders,” Mr. Mathas said.
“Concentrating on these areas will strengthen our ability to serve the needs of millions of Americans, now and decades into the future, who rely on us to help them achieve their financial goals and enjoy a comfortable and secure retirement,” added Mr. Mathas.
Both transactions are expected to close in the first half of 2015. They are subject to receipt of applicable regulatory approvals and other customary closing conditions. Terms of the transactions were not disclosed.
New York Life was advised by Barclays and Willkie Farr & Gallagher LLP.
About New York Life
New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States* and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings currently awarded to any life insurer from all four of the major credit rating agencies: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aaa), Standard & Poor’s (AA+).** Headquartered in New York City, New York Life offers life insurance, retirement income, investments and long-term care insurance through our family of companies. New York Life Investments*** provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as retail mutual funds. Please visit www.newyorklife.com for more information.
*Based on revenue as reported by “Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual),” Fortune magazine, 6/16/14. For methodology, please see http://fortune.com/fortune500/.
**Individual independent rating agency commentary as of 8/13/14.
***New York Life Investments is a service mark used by New York Life Investment Management Holdings LLC and its subsidiary, New York Life Investment Management LLC.
About John Hancock Financial and Manulife Financial
Manulife is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. We operate as John Hancock in the U.S. and as Manulife in other parts of the world. We provide strong, reliable, trustworthy and forward-thinking solutions for our customers’ significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We also provide asset management services to institutional customers. Funds under management by Manulife and its subsidiaries were approximately C$663 billion (US$591 billion) as at September 30, 2014. Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘945’ on the SEHK. Manulife can be found on the Internet at manulife.com.
The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers and administers a broad range of financial products, including life insurance, annuities, investments, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at johnhancock.com.