Venerable Holdings, Inc., a provider of risk transfer solutions to variable annuity issuers, has announced a transaction with Manulife Financial Corporation to reinsure approximately $22 billion of variable annuity business from its US subsidiary John Hancock.
The reinsured business primarily comprises contracts with guaranteed minimum withdrawal benefits (GMWB), issued between 2003 and 2012 by John Hancock Life Insurance Company (U.S.A.), a Michigan domiciled entity.
A small block of policies with only guaranteed minimum death benefits (GMDB) is also included, and John Hancock will retain administration of the block as part of the agreement.
“Today’s announcement evidences the continued execution of Venerable’s growth strategy, demonstrates the strength of our team, and further establishes us as the partner of choice in the variable annuity risk transfer space,” said David Marcinek, Chairman of Venerable.
“Manulife is a sophisticated counterparty with exacting risk management objectives, and we look forward to working with them to realize the value this agreement will deliver to both of our organizations.”
“This transaction represents a significant milestone for Manulife.” added Manulife President & Chief Executive Officer Roy Gori.
“The agreement to reinsure a substantial portion of our U.S. VA block reduces risk, releases approximately $2.0 billion of capital and unlocks shareholder value. We are committed to deploy a significant portion of the capital released to buy back common shares and neutralize the impact of the transaction on core EPS.”
Naveed Irshad, Global Head of Inforce Management, also commented: “We are pleased to execute this transaction with Venerable, a strong and experienced counterparty, and together with a robust deal structure, we have the necessary protections in place to achieve a full risk transfer.”
The transaction is expected increase Venerable’s assets under risk management from $71 billion to $94 billion, and a capital release od approximately $2.0 billion for Manulife.
“We value the opportunity to work with Manulife on this transaction, and our organization stands ready to execute a successful close early next year,” said Venerable CEO Pat Lusk.
“Our unique risk transfer offering and accomplished team, coupled with our robust valuation, hedging, and risk management practices, continue to provide exceptional value to counterparties.”
Wells Fargo Securities, LLC is serving as financial advisor, and Sidley Austin LLP is serving as legal counsel to Venerable in connection with this transaction, which is expected to close in the first quarter of 2022.
