John Hancock latest to yank annuity offerings, pare distribution

John Hancock latest to yank annuity offerings, pare distribution
B-Ds get notice of pullback as job cuts in annuity unit are reported
NOV 16, 2011
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 late last week, as the carrier has decided to sell through only a couple of firms. Executives at broker-dealers said they were told the change would take effect mid-December. A memo from John Hancock to its distributors indicated that the carrier would pull its Venture 4 Series, 7 series and Frontier variable annuities. The insurer's market value adjusted fixed annuities will also be withdrawn, including its JH Choice, JH Signature and Inflation Guard, which was only released in late September. The insurer's Essential Income immediate annuity is also 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 would not comment on the timing of the change, but wrote in an e-mail that “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 report in The Boston Globe that 116 positions were eliminated in a Boston office that handled John Hancock's annuity business. Ms. McGoldrick confirmed the number of eliminations and noted it was equal to about 3% of the carrier'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 had been moved to John Hancock's mutual funds and 401(k) businesses — units the insurer expects to expand. Ms. McGoldrick said the company is still actively hiring and has about 110 open positions. Donald Guloien, chief executive of John Hancock's Canadian parent, Manulife Financial Corp., had noted on 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.” 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. 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. Even the most successful VA players — MetLife Inc. and Prudential Financial Inc. — have reined in product features to temper demand.

Latest News

Practice Management: How to Optimize, Be Efficient, and Capitalize on Opportunities
Practice Management: How to Optimize, Be Efficient, and Capitalize on Opportunities

Hear how top advisors are rethinking practice management with smarter technology, dynamic planning, and scalable systems that free up more time for personalized advice.

When markets break, advisors are tested - here's what clients really need
When markets break, advisors are tested - here's what clients really need

The numbers matter less than you think. In volatile markets, the advisor who shows up, listens, and stays calm will outlast the one who just manages portfolios

Raymond James taps Vanguard's chief architect to drive AI strategy
Raymond James taps Vanguard's chief architect to drive AI strategy

The broker-dealer giant's newest C-suite hire brings 30 years of enterprise technology leadership, including time at Fidelity, to its expanding AI agenda.

Court upholds CFTC denial of whistleblower payout in $1.475B currency case
Court upholds CFTC denial of whistleblower payout in $1.475B currency case

He warned regulators in 2011 - two years before the scandal hit the headlines.

SPONSORED Estate planning isn't a service add-on. It's your retention strategy.

As $84 trillion prepares to change hands, advisors who treat estate planning as peripheral are quietly building a sieve, not a book.

SPONSORED Why strategy matters more than performance

In volatile markets, the advisors who win aren't the ones with the best calls - they're the ones whose clients stay the course.