Gauging Credit Risk Boosts Hancock Returns.The company employs a team of analysts who scour scour, scours 1. the chemical and physical cleaning of fleece wool. 2. diarrhea. dietetic scour see dietary diarrhea. peat scour see secondary nutritional copper deficiency. investment possibilities in search of a good deal. Seeking value through credit analysis has proven to be a lucrative investment technique for John Hancock Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. Group, said John M. DeCiccio, chief investment officer. This emphasis on credit selection and use of private markets produces consistently superior yields. "The market pays for credit risk," he said. "We exploit Inefficiencies in the markers." The company manages about $49.3 billion in its general account, some $4 billion of which is in private placements, DeCiccio said. General-account assets support traditional and universal life insurance products, fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. , long-term-care insurance and guaranteed and participating pension products. It does not include assets underlying variable life and annuity products or investment management for third parties. To implement its strategy, Hancock employs 37 credit analysts in its Bond & Corporate Finance Group. They invest about 75% of the general account. DiCiccio said a strength of these analysts at the transaction level is the ability to recognize a good deal and respond quickly. "In this business, there are no slow no's," he said. At the portfolio level, the analysts have the flexibility to choose among public, private and securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. transactions. They also research the markets to minimize interest-rate and liquidity risks, he said. The investment team is careful to match the kinds of assets to the company's liabilities, particularly duration, convexity Convexity A measure of the curvature in the relationship between bond prices and bond yields. Notes: Positive convexity corresponds to curvature that opens upward. Negative convexity corresponds to curvature that opens downward. and liquidity. The team also uses derivatives to fine-tune its asset/liability management Asset/Liability Management A technique companies employ in coordinating the management of assets and liabilities so that an adequate return may be earned. Also known as "surplus management. and to preserve investment flexibility. In its bond portfolio, including preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . Hancock maintains about 30% of assets in private placements, DeCiccio said. Hancock also holds a higher percentage of bonds below investment grade, about 9% compared with the industry average of 5% |
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