John Hancock Life expands distribution network

John Hancock Life Insurance Corp. will continue to explore areas of cooperation with Citibank as well as other financial institutions in its bid to develop and practice banc-assurance as well as expand its distribution network in the Philippine market.

It presently has a "business partnership" with Citibank through a single insurance product known as CreditShield. The insurance product pays the outstanding balance of the credit card or the minimum monthly amount due if a cardholder dies or disabled.

However, the US-based life insurer wants to expand the partnership with Citibank beyond a single product.

"We are looking for marketing relationships rather than exclusive relationships with banks," said John D. Casey, president and chief executive officer of John Hancock Life. "We would not like to be quarantined."

It can be recalled that the insurer was considered the first to practice bancassurance through an ideal alliance with the then Solid Bank. However, the commercial bank was acquired by Metrobank, which already had an existing alliance with another insurer.

Aside from developing its multi-channel distribution network, the US-based insurer will continue to improve its agency force, which has grown to 369.

While it is numerically inferior to other local insurers, its productivity level of 1.8 cases per month is higher than the industry average of one case per month. Its case size is over P25,000 versus the industry average of P14,000.

"We want to be aggressive but not irresponsible," Casey said.

The chief executive said that it does not have any plans of entering the pre-need industry as some of its counterparts have done. He believes that a lot have still to be done by regulators and the industry itself before it becomes a viable business proposition.

Meanwhile, John Hancock is presently reviewing its pricing scheme as investment earnings have not been as promising as in the previous years. Interest rates have dropped since last year from double-digit figures to single, and it is forecast to move horizontally for the rest of the year. The capital markets however continuous to move upwards albeit cautiously.

Insurers have been forced to increase prices of insurance policies as income from investments had decreased. The flexibility in pricing and better dividend structures was reduced due to lower earnings, and the insurers continue to ensure sufficient reserves to service claims in the future.

"Our dividend structures give us the flexibility to continue selling most products when interest rates fluctuate."

Over 90 percent of its investment portfolio remains in government securities having the safest albeit relatively lower returns over other high-returns but high-risk products. It has also made key investments overseas reaching half of its investment portfolio last year.

Last year, John Hancock Life reported premium income growth of 57 percent over the 2001 period. Its first-year income last year reached P87.5 million while renewals registered at P114 million.

Income from dollar-denominated products reached 31 percent of total premiums. Its market share last year was 1.4 percent. – Ted Torres