John Hancock Life Insurance Company Review: The Facts, The Not-So-Good, The Good
The Facts
In Texas, John Hancock is listed as the 11th largest issuer of life insurance and the 4th largest issuer of annuities. John Hancock Life Insurance was purchased by Manulife of Canada in 2004. The insurer operates as a subsidiary of Manulife offering insurance and financial services in the United States. The financial strength of John Hancock is excellent. The following are the recent financial ratings from five well-established rating services as well as a Comdex Ranking.
A.M. Best Company (Best’s Rating, 15 ratings) A+ (2)
Standard & Poors (Financial Strength, 20 ratings) AA- (4)
Moody’s (Financial Strength, 21 ratings) A1 (5)
Fitch Ratings (Financial Strength, 21 ratings) AA- (4)
Weiss (Safety Rating, 16 ratings) B(5)
Comdex Ranking (Percentile in Rated Companies 93
Financial and safety ratings are important to customers because those ratings indicate the likelihood that a life insurance company is able to maintain their business and pay future benefits. Those that purchase term life insurance want to be assured that the future benefit will be available for their beneficiaries. Those that buy cash value life insurance have the same concern. However, cash value life insurance policy owners also have a keen interest in the company’s ability to maintain profits that will affect the respective cash value of their policies.
To get a better understanding of the profitability of a life insurance company, begin by looking at how they invest their assets. As a business, life insurance companies traditionally invest their assets conservatively because of their obligation to pay death benefits or cash values. A life insurance company that invest their general assets aggressively may be able to beat insurance industry averages. Although, the same company may lose in the long run because of poor performing assets or they may lose value because of the general investment markets.
John Hancock Life Insurance Company holds a very small portion of its assets in stocks, the statement from a VitalSigns report shows only 2.7% in stocks. The majority of the company’s investable assets are in bonds, 60.6% reported by VitalSigns (Ebix, 2018)
Since bonds are a critical part of an insurance company’s stability and safety, the quality of bonds and the length of maturity should be taken into consideration as well. John Hancock Life Insurance Company has 83.6% of its bond holdings in the highest quality of bonds. That would typically be those that are considered AAA rated by bond rating agencies or similar. Additionally, a red flag in analyzing an insurance company’s assets is the percent of non-performing bonds. The reason this is important is non-performing bonds are those that are not paying the interest that they guaranteed. Sometimes this will lead a company that issues the bonds to claim bankruptcy. There is no red flag with John Hancock, their non-performing bonds only represent 0.1% of its assets.
Overall profitability comes from several factors. The company’s general assets that are invested as well as the company’s profit from operations is taken into consideration. For a life insurance company, earnings from operations include life insurance company sales as well as life insurance claims. The gain on assets for John Hancock for the year ending 2017 was 6.47%. This increase in profit is above the life insurance industry average which was 4.24%. The 2.23% over the industry average is a respectable margin. As a customer of a life insurance company, consumers should be cautious of life insurance companies with margins that are too big. High profits are great, however an insurance company is traditionally a business that invest its assets conservatively. John Hancock is within an acceptable range without taking additional risk. All of the previously reported numbers are as of the end of 2017 and reported by VitalSigns (Ebix, 2018).
By reviewing these highlights, it is apparent that John Hancock Life Insurance Company has earned its well deserved ratings from the major rating company’s. It is a financially sound company with a good profitably outlook for the future.
The Not-So-Good
No company is perfect. Every company has problems of one sort or another. The key for consumers is to understand where the problems are and determine if the problems may affect them.
Checking Yelp will indicate that the company has a glaring problem product, long-term care insurance. John Hancock has taken steps to improve the service on their long-term care insurance (Yelp). In 2016, John Hancock Life Insurance withdrew from the long-term care insurance market. At the time the insurer was one of the larger providers of long-term insurance. However, the problems that people reported on Yelp were not the only problems with the product. The United States is approaching a long-term care crisis. Many people need long-term care and many people that will need long-term care. The problem with insurance products is the concept of long-term care did not have enough claims experience to see what was coming. As a result of the much larger than expected number of people claiming the benefits for long-term care insurance, John Hancock could not continue to issue new policies in the same manner as had been done in the past. They have withdrawn from the market and are focusing on managing the block of long-term care insurance that they have.
As of December 15, 2018, John Hancock Life Insurance had 23 complaints filed with the Better Business Bureau in Boston. For a company the size of John Hancock, 23 complaints are not a lot (BBB, 2018) In 2017, the company had 108,746 life and annuity policies written in the State of Texas alone and only one complaint was made to the Texas Board of Insurance (TDI,2017). The nature of the complaint was not available. Most of the complaints made to the BBB were administrative in nature.
Mis-communication with paperwork is a pervasive problem with any life insurance company. Two things can help reduce administrative issues and these are steps that customers can take to minimize problems. . First and foremost, us a local life insurance agent. Agents are experts at solving paperwork problems. Buying life insurance online without any guidance sounds great. Although, customer service while owning the life insurance can become a problem. Life insurance agents know the pitfalls that may occur with administrative issues and are best equipped to handle customer service problems. The second way to solve paperwork problems is to use a company provided form whenever possible and accompany the form with a letter of explanation. Try only to tackle one issue at a time per correspondence as well.
The Good
John Hancock Life Insurance Company has a storied past. The company was established in 1862 and took its name to signify a sign of stability and strength. The namesake, John Hancock was the first signer of the Declaration of Independence and served as the President of the Continental Congress for two years.
Through the 1950s and 1960s John Hancock Life insurance advertised their life insurance services by associating with recognizable sports figures and artist. They ran ads in publications such as Life magazine and the Saturday Evening Post. At the beginning of this article is an advertisement featuring baseball great, Babe Ruth. Below is one of the advertisements featuring the esteemed work of artist Fredric Remington which was used to advertise the life insurance company.
The company no longer uses athletes or artist to promote their life insurance company. However, they still do use the famous image of John Hancock’s signature as a company logo (PHD, 2018)
Innovations happening now.
John Hancock Life Insurance is the first major life insurance company to switch their entire business model to interactive life insurance. “Interactive life insurance is designed to help policy owners live longer lives. Interactive life insurance is like a secret that the rest of the world already knew about, and it is finally introduced to the United States. It is very competitively priced and is more actuarially sound than life insurance sold based on big data” (Richards, 2018).
Changing an entire business model for a large life insurance company is a bold change for John Hancock. Innovations like interactive life insurance are the type of changes that you are more likely to see from a start-up company or a smaller subsidiary. It appears that John Hancock’s switch to completely selling interactive life insurance is based on the changes that this type of life insurance has been having in many other parts of the world. Asia, Africa, Canada, and Europe are areas where interactive life insurance has been accepted with tremendous enthusiasm. The key is that the life insurance has tapped into something that almost everyone wants, a way to live a longer life.
Another exciting change that is occurring within John Hancock Life Insurance Company is the trend to be socially conscious concerning their investment practices. This is good news for those who are interested in buying products and services that are socially responsible and for some biblically responsible. The insurer has not specifically stated their intent to be biblically responsible. However, most of John Hancock Life Insurance's investment practices do meet the moral investment screening preferences of numerous Christians.
The Green Bond Framework of the parent company, Manulife/John Hancock states,
We commit to not knowingly allocate the proceeds of any Green Bond issue in support of the following excluded activities.
1. Gambling
2. Tobacco
3. Alcohol
4. Weapons
5. Adult entertainment
6. Nuclear energy
John Hancock Life Insurance Company has done an exceptional job of managing their assets for the long term, keeping products competitively priced, and secure their holdings for retirement age customers while committing to the goals of younger customers.
By Van Richards
You can contact me at Facebook Messenger, email or phone at 713-320-6124.
References
Better Business Bureau (BBB). (n.d.). John Hancock life insurance company (USA) | complaints. Retrieved December 15, 2018, from https://www.bbb.org/us/ma/boston/profile/insurance-companies/john-hancock-life-insurance-company-usa-0021-186390/complaints
EbixExchange. (2018). John Hancock Life Insurance life insurer financial analysis (VitalSigns). Johns Creek, GA: VitalSales Suite.
Hopkins, J. (2016, November 10). John Hancock withdrawing from long-term care market. Forbes. Retrieved from https://www.forbes.com/sites/jamiehopkins/2016/11/10/john-hancock-withdrawing-from-long-term-care-market/#db271ec426dc
John Hancock Financial. (2018). Homepage | John Hancock. Retrieved December 14, 2018, from https://www.johnhancock.com/individual.html
Manulife/John Hancock. (2017). Green bond framework. Retrieved from Investor Relations website: http://manulife.force.com/servlet/servlet.FileDownload?file=00P5000000u15GVEAY
The Pop History Dig (PHD). (2018). John Hancock summary. Retrieved December 14, 2018, from http://www.pophistorydig.com/?s=John+Hancock
Richards, V. (2018, December 2). Interactive life insurance may help you live longer! Retrieved from https://www.advice4lifeinsurance.com/single-post/2018/12/02/Interactive-Life-insurance-may-help-you-live-longer
Texas Department of Insurance (TDI). (2017). 2017 life and annuity complaint index. Retrieved from https://www.tdi.texas.gov/consumer/documents/cplhci17.pdf
Yelp. (2014, August 5). John Hancock Financial Services company review. Retrieved from Yelp website: https://www.yelp.com/biz/john-hancock-financial-services-boston?osq=John+hancock