Following a Trend, John Hancock Retreating From Annuity Business

Kerry Pechter, editor of RetirementIncomeJournal.com, compared John Hancock's move to a similar decision from Sun Life, another U.S. affiliate of a Canadian company. "After losing $621 million to low interest rates and falling stock prices, its parent, Sun Life of Canada, had to add $500 million to reserves. Sun Life then announced a new, low-risk variable annuity," Pechter, said.

This mirrors what happened to John Hancock. "ManuLife announced a $900-million charge triggered by its John Hancock unit's annuity-related losses. Canadian companies are under stricter accounting standards than U.S. companies, so it's no surprise that these two companies came under pressure to do something."

Genworth announced Jan. 6 that it would discontinue its sales of retail variable annuities and group variable annuities, while ING announced in May 2010 that it was formally exiting the variable annuity business.

It's a trend that Pechter expects to continue. "As long as there's so much uncertainty/volatility in the equity markets and less-than-2 percent 10-year Treasury rates, insurers will hurt," he said. "For some, the losses have been literally unsustainable."