Heavily exposed, Manulife eyes AIG’s assets

Manulife Financial Corp. of Toronto, owner of Boston-based John Hancock Financial Services Inc., is poised to buy AIG’s assets, and the fallen New York-based insurer’s variable annuity business could also be on the table, according to analysts cited in published reports.
A deal for either American International Group Inc.’s domestic annuities unit or certain Asian businesses “would not likely be enormously accretive in the early going” for Manulife, but such an acquisition would add value over the long term, Mario Mendonca, an analyst at Toronto-based Genuity Capital Markets, said in a research report.
Jukka Lipponen, an analyst with Keefe Bruyette & Woods Inc. in Hartford, Conn., told Reuters that Manulife has more than $2.8 billion in excess capital and can take on new debt.
Though Manulife would be interested in such a purchase, the company has been strict about acquisitions and there could be “a fair amount of competition” for AIG’s variable annuities unit, he added.
In other news, Manulife released the details of its exposure to fallen giants Lehman Brothers Holdings Inc. of New York and AIG.
Manulife has some $383 million of exposure in fixed-income investments at Lehman, plus $12 million in derivatives exposure.
In terms of exposure to AIG, Manulife has $38 million in fixed income investments with the U.S. insurer’s holding company and “other” exposures of $9 million.
Manulife also has $190 million in exposure to subsidiary AIG American General Life Cos. of Houston and $15 million in exposure to AIG SunAmerica Life Assurance Co. of Los Angeles in the form of fixed-income investments.
“Other” subsidiary exposures come out to $31 million.
Additionally, the firm has derivatives exposure of $84 million to AIG Financial Products Corp. of Wilton, Conn.
Finally, Manulife reported it had total exposure of $41 million to Washington Mutual Inc. of Seattle.

Related Topics: American International Group (AIG)