In a significant move within the insurance industry, Global Atlantic Financial Group (Global Atlantic) and Manulife Financial Corporation have successfully finalized a $10 billion reinsurance transaction.
The deal, which was initially unveiled last December and has now reached completion, involves the reinsurance of a diverse portfolio of Manulife’s life, annuity, and long-term care (LTC) insurance business originating from the United States and Japan.
This transaction marks the third collaboration between Global Atlantic and Manulife, with an expansion into the Japanese market for Global Atlantic.
It also signifies a notable milestone in the reinsurance landscape, particularly in the long-term care sector, being hailed as the largest LTC reinsurance transaction to date.
In addition to the primary reinsurance agreement, Global Atlantic has further fortified its risk management strategy by retroceding 100% of the long-term care insurance risks to a highly rated third-party global reinsurance partner.
This move underscores Global Atlantic’s commitment to maintaining a prudent approach to risk management while optimising its portfolio.
Commenting on the deal, Roy Gori, President and Chief Executive Officer of Manulife, expressed confidence in the transaction’s significance, stating, “An industry milestone, the transaction is the largest LTC reinsurance transaction ever, and our ability to transact with a leading reinsurance counterparty and its LTC reinsurance partner further validates the prudence of our LTC reserves and assumptions.”
Meanwhile, Manulife has received approval from the Toronto Stock Exchange (TSX) and the Office of the Superintendent of Financial Institutions (OSFI) to initiate share buybacks starting February 23, 2024.
This move aims to return unlocked capital from the transaction to Manulife’s shareholders, demonstrating the company’s commitment to delivering value.
With over 40 transactions successfully completed and more than $140 billion of assets reinsured since its inception, Global Atlantic continues to solidify its position as a preferred reinsurer in the annuity and life insurance marketplace, both domestically and internationally.
The transaction not only reinforces its standing in the United States but also marks a significant expansion of its presence in Japan and across Asia.
