Insurer John Hancock to cut 2 subsidiaries

Boston insurance giant John Hancock yesterday said it plans to eliminate two of its subsidiaries as part of the final administrative steps resulting from the company's $13 billion acquisition by Manulife Financial Corp. of Toronto in 2004.

James D. Gallagher, a Hancock senior vice president, said the changes are "housekeeping" moves that would give John Hancock, now Manulife's US operation, greater flexibility to deploy reserve capital, possibly to finance future acquisitions. Hancock is expected to file papers with the Massachusetts Division of Insurance shortly.

"We need to be ready to acquire other companies," said Gallagher. "We are always looking at acquisitions."

The company wants to merge John Hancock Life Insurance Co. and John Hancock Variable Life Insurance Co. into John Hancock Life Insurance Co. USA, which has its legal headquarters in Michigan. The three subsidiaries combined will have about $211 billion in capital. The change will also simplify financial reporting.

Separately, Hancock plans to change the legal headquarters of its Delaware-based John Hancock Life & Health Insurance Co. to Massachusetts.

Hancock officials said the legal changes would have no impact on employees or policy holders. The firm employs about 4,000 in Massachusetts, most of them at four Boston locations.

Insurance companies typically form numerous legal entities to handle particular lines of business. Companies that sell insurance policies or annuities - financial instruments that create future obligations for the company to pay beneficiaries - are required by regulators to maintain capital levels to honor those commitments. Combining the three entities into one will free up some capital that would otherwise have to be maintained as a reserve.

"It is so difficult to accumulate capital and have it work efficiently that if it isn't working its hardest, you're doing a disservice to your shareholders," said Gallagher.

Moving the Delaware corporation to Massachusetts will enable Hancock to deal with fewer regulators, he said.

If the plan is approved by regulators, the company expects the changes to be finalized by Dec. 31.

Manulife, Hancock's parent, is the sixth-largest life insurance company in the world, ranked by market capitalization at the end of 2007. For 2007, the company posted premiums and deposits of $64.8 billion and had net income of $4 billion.

Jeffrey Krasner can be reached at krasner@globe.com.