The previously announced deal between Munich Re’s US life reinsurance subsidiary, Munich American Reassurance Company (Munich Re Life US) and Manulife Financial Corporation, which sees the former assume the biometric risk on a USD 3.2 billion block of the latter’s long-term care policies, is now in-force.
Manulife highlighted that this deal aligns with its ongoing efforts to reduce the risk profile of its in-force portfolio.
To recap, this transaction, including Manulife’s previous long-term care reinsurance transactions, ensures a 24% reduction in the firm’s cumulative sensitivity to long-term care morbidity.
The transaction aligns with and was priced similarly to Manulife’s prior deals and includes a modest negative 5% cede, which the company said further validates its reserves and assumptions.
For Manulife, this reinsurance agreement is largely capital-neutral, with an immaterial impact on both core earnings and net income attributable to shareholders of about USD 30 million in the first year, declining over time.
Manulife stated that this is its third long-term care policies reinsurance transaction, and the first on a standalone long-term care block. The firm also confirmed that the risk transfer will not include any asset transfers.
Recently, global reinsurer Fortitude Re signed a USD 3.8 billion long-term care reinsurance transaction between its subsidiary, Fortitude Reinsurance Company Ltd. (FRL) and Unum Life Insurance Company of America (Unum), a subsidiary of Unum Group.
