Canada’s Manulife signs C$5.4 billion reinsurance deal to lower risk

CANADA’S Manulife Financial will reinsure C$5.4 billion (S$5.2 billion) of its reserves as it looks to transfer some risk from its portfolio and free up capital for stock buybacks.

The agreement with Reinsurance Group of America covers C$2.4 billion of long-term care reserves, Manulife said on Wednesday (Nov 20).

Long-term care insurance is considered a high-risk business as it involves coverage for people with chronic or disabling conditions who need constant care, typically found in individuals over 65.

Insurers maintain reserves to pay out claims by policyholders. By reinsuring those reserves, they can transfer some of those obligations and unlock capital to underwrite additional policies or return capital to shareholders.

Manulife said the latest deal will free up C$800 million of capital for buybacks.

Earlier this year, it had clinched a reinsurance deal with RGA Life Reinsurance Company of Canada for C$5.8 billion of reserves. REUTERS