John Hancock, a subsidiary of Manulife Financial Corporation, and Reinsurance Group of America (RGA) have announced an agreement to reinsure approximately US$4.1bn in liabilities, comprising $1.9bn in long-term care (LTC) and $2.2bn in structured settlements.
The reinsured LTC block consists of policies that closely match the characteristics of RGA’s current in-force LTC portfolio, including that all such policies were issued in 2007 or later. The structured settlements block highlights the power of RGA’s expertise in longevity risk and the company’s 25-year history as a premier provider of asset-intensive solutions. Both transactions are on a full-risk basis, with RGA coinsuring 75% quota share (25% retained by John Hancock). RGA will also continue supporting John Hancock on their expected growth in US permanent life business through partnership on yearly renewable term reinsurance, at market terms.
“We are excited to announce another mutually beneficial transaction with Manulife and are grateful for their continued trust in RGA,” said Ron Herrmann, Executive Vice President, Head of the Americas, RGA.
“RGA’s expertise in biometric risks, combined with our robust asset platform, enables us to reinsure both sides of the balance sheet, delivering tailored long-term value through transactions like this. The acquired LTC block aligns well with our existing LTC portfolio, and both blocks will benefit from our diverse asset capabilities.”
“The transaction is funded with existing internal capital resources and is expected to be accretive to RGA earnings in 2025, with attractive returns on capital,” said Axel André, Executive Vice President, Chief Financial Officer, RGA.
Sidley Austin acted as legal advisor to RGA in the transaction; Manulife will continue to administer all policies as part of this arrangement. The transaction is expected to close in early 2025, subject to customary closing conditions.
