Munich Re has agreed to assume the biometric risk on a $3.2 billion block of long-term care policies from Manulife Financial Corporation through its US life reinsurance subsidiary, Munich American Reassurance Company (Munich Re Life US).
According to Manulife, the transaction, expected to close in Q4 2026 pending regulatory approvals, highlights the firm’s continued effort to reduce the risk profile of its inforce portfolio.
Manulife said that, including its previous long-term care reinsurance transactions, the deal will reduce its cumulative sensitivity to long-term care morbidity by 24% once it closes.
The transaction was priced similarly to prior deals and includes a modest negative 5% cede, which the company said further validates its reserves and assumptions.
Manulife added that the agreement is expected to be largely capital-neutral, with an immaterial impact on both core earnings and net income attributable to shareholders of about $30 million in the first year, declining over time.
Phil Witherington, President & Chief Executive Officer, Manulife, commented, “Today’s announcement represents our third LTC reinsurance transaction in under three years and first on a standalone LTC block, reflecting our ability to reduce our risk profile and strengthen our business through innovative actions.
“Looking ahead, we continue to see meaningful opportunities to improve our long-term care portfolio through organic initiatives that will enhance risk-adjusted returns and generate significant shareholder value.”
