Prudential Financial Inc. has spent the last six months making itself over as a life insurance and financial services company while John Hancock Financial Services Inc. has been looking for a merger partner.
So a report that the two had discussed merging came as no surprise to analysts.
"I don't think it's any secret that Hancock expects to see consolidation in the market," said Arthur M. Fliegelman, a vice president at Moody's Investors Service in New York. "Clearly they are willing to have discussions with people, including companies that would buy them."
Michael J. Barry, a managing director of insurance with Fitch Inc., noted that Hancock, of Boston, and Prudential, of Newark, N.J., have many of the same core businesses.
"From both a life insurance perspective and an asset management perspective, there is tremendous overlap," Mr. Barry said, adding that Fitch expects consolidation in the life insurance industry. "This deal would have been more overlap than anything else, with the one exception being that John Hancock is also a big player in long-term care. Prudential isn't."
An article in Thursday's Boston Globe said eight months of talks broke down this month on a deal to have Prudential buy Hancock.
This is the second time in recent weeks that Hancock was reported close to being sold. Reports in May had FleetBoston Financial Corp. acquiring it, but those talks also failed to produce an agreement, the reports said.
Buying Hancock would have furthered a metamorphosis at Prudential, which bought the variable annuity provider American Skandia in December, sold controlling interest in its brokerage unit to Wachovia Corp., keeping a 38% ownership stake, and agreed in late May to sell its property/casualty business to Liberty Mutual Group and Palisades Group for $673 million.
(Palisades Group is buying the property/casualty operations in New Jersey. Liberty is buying the operations in the remaining 47 states where Prudential does business.)
Hancock spokesman Roy Anderson and Prudential spokesman Bob DeFillippo declined to comment on Thursday's Globe story.
But in recent weeks Prudential has said it wants to make more acquisitions, and Hancock chief executive officer David D'Alessandro has said more than once that it has to buy or do a merger of equals to remain competitive.
Mr. Fliegelman said he did not count out a bank suitor for Hancock, or any other insurer. "Certainly, most banks do not want to be in the insurance business, but you could always see an exception," he said.
Prudential has also said it is not ruling out further deals.
"We're a financial services company with a substantial asset management business and a robust international insurance and investments business," Mr. DeFillippo said in a late-May interview. Prudential would consider any deal complementing its current core businesses, he said.
The talks collapsed over several issues, according to the Globe, including where job cuts would come. The newspaper also said that Prudential chairman and CEO Arthur Ryan would have led the combined company, with Mr. D'Alessandro in position to take over within two years.
Prudential's market capitalization is $18.5 billion and Hancock's is $8.9 billion. Both are former mutual companies - Prudential went public in December 2001, Hancock in January 2000.
