Global Atlantic Closes on $10B Manulife Reinsurance Deal

By Allison Bell

News February 23, 2024 at 04:49 PM

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The John Hancock Building in Boston. Credit: John Hancock

Global Atlantic said Thursday that it has closed on a previously announced reinsurance deal with Manulife Financial.

The deal includes blocks of U.S. life insurance, U.S. annuities and Japanese whole life insurance policies backed by $5.6 billion in assets, in U.S. dollars.

The deals also include U.S. long-term care insurance policies backed by $4.4 billion in assets.

The LTCI policies were issued by Manulife's John Hancock subsidiary.

Reinsurers and LTCI issuers have had trouble agreeing on prices for LTCI reinsurance, and the arrangement is the biggest LTCI reinsurance deal ever announced, according to Global Atlantic.

Global Atlantic, a subsidiary of KKR, has assumed responsibility for the investment risk related to the LTCI block and passed the LTCI claim risk on to another insurer through a "retrocession" arrangement, or a reinsurance arrangement for a reinsurance arrangement. Global Atlantic has not identified the retrocession provider.

For the direct writer of a product, having access to reinsurance is like having access to a safety net. The LTCI component of the Global Atlantic-Manulife reinsurance deal might make some insurers more comfortable with the idea of selling LTCI policies.

The U.S. LTCI market boomed in the 1990s. The market began to freeze over in the early 2000s, after new state LTCI rate stability rules took effect and the issuers discovered that they had based prices on overly optimistic assumptions.

The John Hancock Building in Boston. Credit: John Hancock

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