The reinsurance deal will allow the Canadian insurer to invest in high-potential growth areas. — Reuters
NEW YORK: Manulife Financial Corp is further de-risking its long-term care business by reinsuring C$13bil (US$9.6bil) of its reserves with KKR & Co-backed Global Atlantic, with Canada’s top insurer planning to buyback shares with the capital released with the deal.
The reinsurance deal will cut Manulife’s long-term care (LTC) reserves by C$6bil, or 14% of its total reserves. It will allow the Canadian insurer to invest in high-potential growth areas.
LTC insurance risks are simultaneously reinsured with a third-party global reinsurer and not retained by Global Atlantic, the company said in a statement.
It is considered a high-risk business as it involves coverage for people with a chronic or disabling condition who need constant care, typically those above the age of 65.“We wanted to reset our investors’ expectations around this business,” head of Inforce Management Marc Costantini said in an interview.
Apart from LTC, the reserves range across multiple product lines including payout annuities and whole life policies helping Manulife dispose C$1.7bil of alternative long-duration assets, the company said. — Reuters
