Manulife's John Hancock Reinsurance Deal Includes $1.9B LTCI Block

By Allison Bell

News November 20, 2024 at 06:45 PM

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Reinsurance Group of America has agreed to reinsure a $4.1 billion block of Manulife Financial U.S. insurance business that includes $1.9 billion in long-term care insurance policies.

The block also includes $2.2 billion in structured settlement annuities, or annuities used to fund lawsuit damages payments.

John Hancock will also be continuing to use RGA to reinsure permanent life insurance policies.

In February, Manulife closed on a big reinsurance deal with Global Atlantic. That deal included U.S. LTCI policies backed by $4.4 billion in assets.

What it means: The RGA deal could be a sign that reinsurers and their investors are continuing to warm up to long-term care insurance risk.

Increased investor interest in LTCI could help lead to an increase in new stand-alone LTCI policy sales.

But the fact that the deal included policies other than LTCI policies may also confirm the observation of Ameriprise executives that reinsurers are still cool toward LTCI blocks and want the direct writers to package LTCI policies with other types of policies.

The LTCI block: The LTCI policies involved in the RGA reinsurance deal were written by Manulife's John Hancock unit.

The policies were sold after 2006. John Hancock is keeping 25% of the risk associated with the block.

The history: John Hancock and other U.S. insurers once raced to write new stand-alone LTCI policies, based on a belief that the baby boomers would need a way to pay for care in old age.

John Hancock and many other direct writers suspended sales after learning that they had gotten assumptions about how the products would work wrong and had underpriced the products.

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