Manulife Financial Corp. said Monday it agreed to have Global Atlantic reinsure C$13 billion ($9.6 billion) of its reserves across four legacy/low return-on-equity blocks.
With capital freed up from the deal, Manulife Financial
MFC,
MFC,
said it plans to buy back C$1.2 billion in stock as part of the deal.
Manulife’s stock rose 2.1% on Monday.
The blocks in the reinsurance deal include portions of U.S. long-term care (LTC), U.S. structured settlements, and two Japan whole-life products.
The LTC block represents C$6 billion, or 14% of Manulife’s total LTC reserves as of Sept. 30 and marks the largest reinsurance transaction in the LTC space.
Manulife said the deal “represents a full risk transfer with significant structural protection, and with a highly experienced counterparty and its partners.”
Global Atlantic, backed by KKR & Co. Inc.
KKR,
said the deal marked its first block reinsurance transaction in Japan.
The deal “showcases Global Atlantic’s unique ability to underwrite, structure and execute on multiple liabilities and across the global insurance market,” the company said.
The deal comes less than two weeks after KKR & Co. said it agreed to pay about $2.7 billion to acquire the remaining 37% stake of Global Atlantic that it doesn’t already own.
The deal is expected to close in the first quarter of 2024.
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