Leading financials services company Global Atlantic Financial Group and life insurer MetLife, Inc. have entered into a reinsurance agreement valued at $19.2 billion.
The deal will see Global Atlantic reinsuring a diversified portfolio of MetLife’s U.S. retail annuity and life insurance business, reinforcing Global Atlantic’s position as a leading reinsurer in the annuity and life insurance marketplace.
Manu Sareen, Co-President and Head of Institutional Markets for Global Atlantic, highlighted the collaborative effort between the two companies in understanding MetLife’s financial objectives and risk transfer needs. This enabled the development of a custom and comprehensive solution that aligns with Global Atlantic’s expertise in managing both spread and fee-based liabilities.
Under the terms of the agreement, MetLife will transfer $14 billion of U.S. retail life insurance reserves, consisting of universal life, variable universal life, and universal life with secondary guarantees, along with $5.2 billion of fixed annuity reserves to Global Atlantic.
At the time of closing, Global Atlantic’s general account assets under management supporting the transaction will amount to approximately $13 billion.
The combined value of the reinsurance agreement is estimated to be approximately $3.25 billion, with MetLife receiving a ceding commission of $2.25 billion and $1 billion of released capital.
Moreover, as part of its commitment to enhancing shareholder value, MetLife’s Board of Directors has authorised an additional $1 billion for share repurchases, bringing the total outstanding share repurchase authorisation to approximately $4 billion.
MetLife’s President and CEO, Michel Khalaf, expressed his enthusiasm about the agreement, stating, “This transaction is another critical step in creating long-term value for our shareholders and for all our stakeholders. It will reduce enterprise risk and enable us to further invest in responsible growth while also returning capital to our shareholders — underscoring our financial strength and our balanced approach to capital management.”
MetLife expects the transaction to have a positive impact on key financial metrics, including contributing to adjusted earnings per diluted share and supporting the company’s target of a 13% to 15% adjusted return on equity.
Goldman Sachs & Co. LLC served as MetLife’s financial advisor for this transaction, and legal counsel was provided by Willkie Farr & Gallagher LLP.
Barclays Capital Inc. is acting as the financial advisor, while Sidley Austin LLP is serving as the legal counsel to Global Atlantic for this transaction.
The completion of the reinsurance transaction is anticipated to occur in the second half of 2023, subject to the fulfillment of customary closing conditions and regulatory approvals.