Global Atlantic Announces $10 Billion Block Reinsurance Agreement with Manulife Across Both US and Japan Business

Rhea-AI Summary

Global Atlantic Financial Group (GAFG) has signed a $10 billion reinsurance agreement with Manulife Financial Corporation (MFC). This marks the third block transaction between the two companies and showcases Global Atlantic's ability to underwrite, structure, and execute on multiple liabilities across the global insurance market. The agreement will reinsure a seasoned and diversified block of Manulife’s life, annuity, and long-term care insurance business originated in the US and Japan. Global Atlantic will retain the underlying spread-based risks on a subset of the block that involves the LTC business. This deal further solidifies Global Atlantic's position as a reinsurer of choice in the annuity and life insurance marketplace.

NEW YORK--(BUSINESS WIRE)-- Global Atlantic Financial Group (“Global Atlantic”), a leading insurance company meeting the retirement and life insurance needs of individuals and institutions, today announced it has signed a $10 billion reinsurance agreement with Manulife Financial Corporation (NYSE: MFC).

Key Highlights of the Transaction:

• Third block transaction Global Atlantic has executed with Manulife, a leading international financial services provider and wealth manager. Highlights successful partnership between organizations.
• Showcases Global Atlantic’s unique ability to underwrite, structure and execute on multiple liabilities and across the global insurance market and includes Global Atlantic’s first block reinsurance transaction in Japan.
• The transaction, signed between subsidiaries of the companies, will reinsure a seasoned and diversified block of Manulife’s life, annuity, and long-term care insurance business originated in the US and Japan.
• Following a concurrent transaction where 100% of the long-term care (“LTC") insurance risks are simultaneously reinsured with a highly rated third-party global reinsurer, Global Atlantic will only retain the underlying spread-based risks on the subset of the block that involves the LTC business.
• Similar to Global Atlantic’s other spread-based reinsurance transactions, the predictable nature of the retained risks makes this an attractive profile for Global Atlantic and Ivy II, its co-investment vehicle.

With this deal, Global Atlantic further advances its position as a reinsurer of choice in the annuity and life insurance marketplace. The company has established a 20-year track record, successfully completing more than 40 transactions with nearly 30 clients and reinsuring more than $140 billion of assets since inception.

“Throughout this process, we partnered closely with Manulife teams in Canada, the US and Japan to gain a strong understanding of their goals” said Manu Sareen, Co-President of Global Atlantic. “Due to our organizations’ close collaborative process, we were able to develop a tailored solution that aligns with all parties’ strategic objectives. Our innovative LTC structure separates the insurance risks from the underlying investment and spread-based risk, and enables Global Atlantic to reinsure the insurance risks to a highly regarded reinsurance partner. With this structure, our retained liability cashflows on this part of the transaction are not subject to any lapse, longevity or morbidity risks.”

The block currently has approximately $10 billion in general account assets across multiple product lines including payout annuities, whole life policies and long-term care policies. The Japan whole life block represents approximately $4 billion USD equivalent (¥574 billion) assets making the transaction one of the largest Japanese reinsurance deals in recent history and further advancing Global Atlantic’s presence and commitment across Asia. Global Atlantic will retrocede the long-term care insurance risk to a well-established and highly rated third-party reinsurer.

Under the terms of the agreement, Manulife will reinsure the blocks and transfer general account assets to Global Atlantic. Manulife will also retain servicing and administration of the policies.

The transaction is expected to close in the first half of 2024, subject to satisfaction or waiver of customary closing conditions specified in the agreement, including the receipt of required regulatory approvals.

About Global Atlantic

Global Atlantic Financial Group is a leading insurance company meeting the retirement and life insurance needs of individuals and institutions. With a strong financial foundation and risk and investment management expertise, the company delivers tailored solutions to create more secure financial futures. The company's performance has been driven by its culture and core values focused on integrity, teamwork, and the importance of building long-term client relationships. Global Atlantic is a majority-owned subsidiary of KKR, a leading global investment firm. Through its relationship, the company leverages KKR's investment capabilities, scale and access to capital markets to enhance the value it offers clients. KKR's parent company is KKR & Co. Inc. (NYSE: KKR).

Certain information contained in this press release constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “target,” “intend,” “continue” or “believe,” other variations thereon or comparable terminology. The forward-looking statements speak only as of the date hereof and are based on Global Atlantic’s current beliefs, assumptions and expectations. Due to various risks, uncertainties and contingencies, including but not limited to obtaining required regulatory approvals, closing on signed transactions and whether the anticipated benefits of a transaction can be achieved within expected timeframes, actual events or results or performance may differ materially from what is reflected or contemplated in such forward-looking statements. Global Atlantic undertakes no obligation to update or revise any of these forward-looking statements, whether to reflect new information, future events or circumstances or otherwise. Past performance is not a guarantee of future results.

Global Atlantic Financial Group (Global Atlantic) is the marketing name for The Global Atlantic Financial Group LLC and its subsidiaries.

Reinsurance transactions are entered into by Global Atlantic Assurance Limited, Global Atlantic Re Limited, Commonwealth Annuity and Life Insurance Company, First Allmerica Financial Life Insurance Company or one of their affiliates. Reinsurance is placed, where required by applicable law, by Global Atlantic Risk Advisors, L.P., a licensed reinsurance intermediary and subsidiary of The Global Atlantic Financial Group LLC.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231210226313/en/

ICR Inc.

GlobalAtlantic@icrinc.com

(203) 682-8268

Source: Global Atlantic Financial Group

FAQ

What is the reinsurance agreement between Global Atlantic Financial Group and Manulife Financial Corporation?

The reinsurance agreement is a $10 billion deal that involves reinsuring a block of Manulife’s life, annuity, and long-term care insurance business originated in the US and Japan. Global Atlantic will retain the underlying spread-based risks on a subset of the block that involves the LTC business.

How does the reinsurance agreement showcase Global Atlantic's capabilities?

The agreement showcases Global Atlantic's unique ability to underwrite, structure, and execute on multiple liabilities across the global insurance market.

What is the significance of the agreement for Global Atlantic?

The deal further solidifies Global Atlantic's position as a reinsurer of choice in the annuity and life insurance marketplace.

What are the key financial details of the reinsurance agreement?

The agreement involves approximately $10 billion in general account assets across multiple product lines, including payout annuities, whole life policies, and long-term care policies. The Japan whole life block represents approximately $4 billion USD equivalent (¥574 billion) assets, making it one of the largest Japanese reinsurance deals in recent history.

When is the expected closing date of the reinsurance agreement?

The transaction is expected to close in the first half of 2024, subject to satisfaction or waiver of customary closing conditions specified in the agreement, including the receipt of required regulatory approvals.