15 February 2019 13:30
Photo : Freepik
Manulife has reached an agreement with the reinsurance company RGA Canada to cover the longevity risk attached to a block of business canadian group annuities in the disbursement phase, which comprises 45 000 annuitants. Manulife is a further step in its strategy to release capital.
Reinsurer is particularly active in the insurance market longevity, RGA has recalled its links with Manulife. “We have a long-standing partnership with Manulife, and we are proud to implement another custom solution to meet their financial objectives “, said the CEO of RGA Canada, Alka Gautam.
John Laughlin, executive vice president of financial solutions to the global parent company, Reinsurance Group of America (RGA), added that ” this transaction demonstrates once again the expertise of RGA in longevity risks and its ability to enter into transactions for its clients “.
RGA manages risks in insurance of persons of a portfolio global in-force business represents about $ 3.3 trillion dollars (a trillion equals 1,000 billion). It is headquartered in the United States, in St. Louis, in the state of Missouri.
A transaction private
It has not been possible to ascertain the dollar amount of the hedged risk. In its announcement, RGA stated that no additional detail was not revealed on this transaction.
On the side of Manulife, we could not respond immediately to questions from the Journal of insurance, so that all the attention of the insurer turns to the record financial results that it comes to disclose.
It is important to note, however, that Manulife had announced as early as November 1, 2018 in any other transaction, it is fit to release more than$ 1 billion of capital. The company has announced agreements to reinsure virtually all of its former products, individual annuities and group exhibitions in the United States, as well as the risks related to mortality and lapse on part of its old contracts universal life insurance canadians.
“We plan to release more than$ 1 billion of capital at the end of these operations, which marks an important step in the optimization of our portfolio, and constitutes an important progress towards our target of$ 5 billion by 2022 “, had then explained Roy Gori, president and chief executive officer of Manulife.
Segregated funds less “capitalistic”
In its results for the first quarter of 2018, Mr. Gori has reiterated its determination to free up capital by reducing the risk of its activities. “In 2018, we sold assets alternative long-term, we have completed six reinsurance transactions that cover blocks of contracts to traditional universal life insurance and fixed annuity, we sold Signator Investors, our securities dealer wholly owned, and we have offered to clients who are investing in some of our traditional products of segregated funds in Canada the option to convert their contract into a product of segregated funds less capital-intensive. These initiatives have resulted in the release of the equity of $ 3.0 billion in 2018 “, said the CEO of Manulife.
The reinsurance of a block of group annuities of such magnitude is not common. However, this trend is increasing, exacerbated by an improvement in the unprecedented life expectancy. The Journal of the insurance devoted a special report on the different strategies and the latest developments of insurers and reinsurers in risk transfer of longevity, in its edition of January-February 2019.
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