John Hancock Mutual Life Insurance Co. is considering buying Essex Corp., industry sources said.

No deal has been signed, but sources close to Essex said John Hancock, Boston, is a top contender for the third-party marketer of investment services.

Though John Hancock declined to comment for this article, an executive recently told The Wall Street Journal that the company expects to announce a small acquisition of a distribution-related firm in 1999. Frederick S. Nicholas, president of Essex, declined to comment, citing company policy.

Essex would give John Hancock access to a host of banks in which to sell life insurance. Essex, with 100 bank clients, sold $3.1 billion of mutual funds and annuities in 1997.

"Essex is the biggest distributor (of annuities) through banks, and banks are the largest untapped channel for insurance products," a source close to Essex said.

"Essex may also be seeking out this type of relationship" so it can offer life insurance to its bank partners, the source added. The source said many of the marketing firm's bank clients are demanding that life insurance be part of Essex's product menu.

And Cendant Corp. of Parsippany, N.J., which owns Essex, has been shedding noncore businesses to repay debt and buy stock. It mostly franchises hotels and real estate, and recently sold Hebdo Mag International, a publisher and distributor of classified advertising information.

Cendant, which declined to comment for this article, is also selling its consumer software business.

Meanwhile, John Hancock has formed a unit to identify financial services companies it could buy as it converts from a policyholder-owned mutual insurer to a publicly traded company.

The company said in a release that it would focus on acquisitions that would help it "achieve economies of scale and significantly enhance product and distribution capabilities."

One observer noted that John Hancock had made an offer for Essex-before it was bought by CUC International in January 1995 for $27 million. CUC International merged with HFS International in December 1997 to form Cendant.

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