On November 21, 2024, Reinsurance Group of America (RGA), one of the world’s largest life and health reinsurers, and John Hancock, a subsidiary of Manulife Financial Corporation, announced a reinsurance agreement worth approximately $4.1 billion.
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The agreement covers $1.9 billion in long-term care (LTC) liabilities and $2.2 billion in structured settlements. This deal is part of the long-standing partnership between RGA and Manulife, which spans multiple business lines and international markets.
Details of the Reinsurance Agreement
This reinsurance agreement encompasses a significant volume of LTC policies issued from 2007 onwards, aligning with RGA’s existing LTC portfolio. The structured settlements block leverages RGA’s expertise in longevity risk management and its 25-year history of delivering asset-intensive reinsurance solutions.
Under the agreement, both transactions are categorized as full-risk reinsurance, with RGA co-insuring a 75% quota share, while John Hancock retains the remaining 25%. RGA will also continue to support John Hancock’s growth in the U.S. permanent life insurance business through yearly renewable term reinsurance arrangements.
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Strengthening the Strategic Partnership Between RGA and Manulife
Ron Herrmann, Executive Vice President and Head of the Americas at RGA, highlighted that this transaction underscores the strength of the partnership with Manulife and aligns with RGA’s expertise in biometric risks and asset management.
“We are thrilled to announce another mutually beneficial transaction with Manulife and deeply value their continued trust in RGA,” Herrmann said. “The reinsured LTC block aligns perfectly with our existing LTC portfolio, and both blocks will benefit from our diverse asset management capabilities.”
Axel André, Executive Vice President and Chief Financial Officer at RGA, stated that the transaction was funded through existing internal capital resources and is projected to boost RGA’s earnings in 2025 while delivering attractive returns on capital.
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Expanding and Optimizing the Global Reinsurance Portfolio
This announcement further strengthens the partnership between RGA and Manulife, following key transactions earlier this year. In early 2024, the two companies executed a major coinsurance transaction for universal life business in Canada, adding to a series of deals optimizing portfolios in Canada and the U.S.
RGA also affirmed its commitment to supporting Manulife across various regions through biometric reinsurance, product development, and underwriting partnerships.
Significance of the Transaction for the Reinsurance Industry
The $4.1 billion agreement between RGA and John Hancock is not only strategic but also plays a crucial role in strengthening both companies’ positions in the global reinsurance market. With effective risk management and extensive experience, RGA is leveraging strategic partnerships to expand its reinsurance portfolio and deliver added value to both clients and shareholders.
Meanwhile, John Hancock will continue to administer all insurance policies under this arrangement, ensuring continuity and stability for its policyholders.
Expectations and Future Directions
The transaction is expected to close in early 2025, subject to customary conditions. Sidley Austin LLP served as legal advisor to RGA for this deal.
This reinsurance agreement marks a significant milestone in the collaboration between RGA and Manulife and demonstrates substantial growth potential in the reinsurance sector, especially as companies focus on portfolio optimization and enhanced risk management capabilities.
With strong strategies and extensive partnerships, RGA and Manulife continue to reshape the reinsurance market, paving the way for a sustainable and comprehensive future.
