Manulife Financial Agrees to C$13 Billion Reinsurance Deal With Global Atlantic

By Adriano Marchese

Manulife Financial said Monday that it has agreed to a 13 billion Canadian dollar ($9.57 billion) reinsurance deal with Global Atlantic, reinsuring four blocks of legacy and low return-on-equity business.

The Canadian insurer said the deal is a full risk transfer, and includes significant structural protections, including overcollateralized trusts to hold investment assets.

The blocks include portions U.S. long-term-care, U.S. structured settlements and two Japan whole life products.

The LTC block represents C$6 billion, or 14% of Manulife's total long-term-care reserves as of Sept. 30, 2023, Manulife said. The company expects to dispose $1.7 billion of alternative long-duration assets in connection with the deal.

The transaction is priced at a one-times book value multiple, with a modest negative ceding commission on LTC and structured settlement blocks, offset by a positive ceding commission on the Japan blocks.

Manulife said the transaction is priced at book value and is expected to result in an annual reduction to core earnings of about C$130 million and net income of about $15 million.

The company said the deal is expected to be $0.01 accretive to core earnings per share and $0.07 accretive to EPS, and that it also releases C$1.2 billion of capital which the company intends to return to shareholders.

Global Atlantic has two existing reinsurance arrangements with Manulife.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

December 11, 2023 07:30 ET (12:30 GMT)

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