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Global Atlantic Closes $10 Billion Block Reinsurance Transaction with Manulife across both US and Japan Business

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Global Atlantic Financial Group closes $10 billion reinsurance deal with Manulife Financial Corporation, reinforcing its position as a leading reinsurer in the annuity and life insurance market globally.
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The closing of the $10 billion reinsurance transaction between Global Atlantic Financial Group and Manulife Financial Corporation is a significant event for stakeholders of both companies. Reinsurance agreements of this scale can lead to a redistribution of risk and capital, potentially affecting the financial stability and risk profiles of the entities involved. For Manulife, this transaction may free up capital, allowing for reinvestment or return to shareholders and possibly leading to a more favorable risk management position by offloading certain liabilities.

From an investment perspective, the transaction could be interpreted as a positive signal for Manulife's strategic focus on optimizing its insurance portfolio. For Global Atlantic, the deal enhances their stature in the reinsurance market, particularly in Asia with their first Japanese transaction, which could lead to future growth opportunities in a region with an aging population and increasing demand for insurance products.

It is important to monitor how this transaction affects the earnings and capital ratios of both companies in subsequent financial disclosures. Investors should also consider the potential for increased competitive advantage and market share for Global Atlantic in the reinsurance sector.

This transaction is a notable development in the global reinsurance landscape, marking one of the largest Japanese reinsurance deals in recent history. The move by Global Atlantic to expand its presence in Japan and Asia is strategic, given the region's potential for growth in the life insurance sector. Japan's demographic trends, with an aging population and a shrinking workforce, present a growing market for retirement and life insurance products.

Expansion into new markets like Japan can diversify Global Atlantic's revenue streams and mitigate risks associated with market saturation or economic downturns in its existing markets. However, entering a foreign market also comes with challenges, such as regulatory hurdles and the need to adapt to local market conditions and consumer preferences.

For the industry, this transaction may signal increased consolidation and competition, as companies strive to achieve scale and diversification. The retrocession of long-term care insurance risks to a third-party indicates a strategic approach to risk management, which could become a trend among insurers seeking to balance risk and capital efficiency.

The completion of the reinsurance transaction involves complex legal considerations, particularly with the inclusion of a retrocession agreement for the long-term care insurance risks. Retrocession arrangements can be intricate, as they require a clear delineation of the transferred risks and obligations among the parties. The legal frameworks governing these transactions must be navigable in multiple jurisdictions, as this deal spans the US and Japan, each with its own regulatory environment.

Compliance with both domestic and international insurance regulations is crucial for the legitimacy and smooth operation of such agreements. The legal teams involved would have had to ensure that the transaction adheres to the relevant insurance laws, tax implications and cross-border regulations. It's also essential to consider the legal precedents set by this transaction, as it could influence future deals, especially in the burgeoning Asian insurance market.

For stakeholders, the legal robustness of the transaction provides confidence in its stability and the protection of their interests. However, any future changes in regulatory policies could affect the terms or viability of the agreement, which must be monitored closely.

NEW YORK--(BUSINESS WIRE)-- Global Atlantic Financial Group (“Global Atlantic”), a leading insurance company meeting the retirement and life insurance needs of individuals and institutions, today announced the closing of its $10 billion reinsurance transaction with Manulife Financial Corporation (NYSE: MFC). The transaction, signed and previously announced between subsidiaries of the two companies last December, reinsures a seasoned and diversified block of Manulife’s life, annuity, and long-term care (“LTC”) insurance business originated in the US and Japan. It represents the third block transaction Global Atlantic has executed with Manulife and includes Global Atlantic’s first block reinsurance transaction in Japan. General account assets under management supporting the transaction at closing are approximately $10 billion.

Simultaneous to the closing of the reinsurance transaction with Manulife, Global Atlantic also closed on the retrocession of 100% of the long-term care insurance risks to a highly rated third-party global reinsurance partner. Global Atlantic only retains the underlying spread-based risks on the subset of the block that involves the LTC business.

With this deal, Global Atlantic further advances its position as a reinsurer of choice in the annuity and life insurance marketplace, both in the US and globally. The company has established a 20-year track record, successfully completing more than 40 transactions with nearly 30 clients and reinsuring more than $140 billion of assets since inception. The transaction also marks one of the largest Japanese reinsurance deals in recent history, and expands Global Atlantic’s presence and commitment in Japan and across Asia.

About Global Atlantic
Global Atlantic Financial Group is a leading insurance company meeting the retirement and life insurance needs of individuals and institutions. With a strong financial foundation and risk and investment management expertise, the company delivers tailored solutions to create more secure financial futures. The company's performance has been driven by its culture and core values focused on integrity, teamwork, and the importance of building long-term client relationships. Global Atlantic is a wholly-owned subsidiary of KKR, a leading global investment firm. Through its relationship, the company leverages KKR's investment capabilities, scale and access to capital markets to enhance the value it offers clients. KKR's parent company is KKR & Co. Inc. (NYSE: KKR).

Certain information contained in this press release constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “target,” “intend,” “continue” or “believe,” other variations thereon or comparable terminology. The forward-looking statements speak only as of the date hereof and are based on Global Atlantic’s current beliefs, assumptions and expectations. Due to various risks, uncertainties and contingencies, including but not limited to obtaining required regulatory approvals, closing on signed transactions and whether the anticipated benefits of a transaction can be achieved within expected timeframes, actual events or results or performance may differ materially from what is reflected or contemplated in such forward-looking statements. Global Atlantic undertakes no obligation to update or revise any of these forward-looking statements, whether to reflect new information, future events or circumstances or otherwise. Past performance is not a guarantee of future results. General account assets may not equal assets under management as reported by KKR.

Global Atlantic Financial Group (Global Atlantic) is the marketing name for The Global Atlantic Financial Group LLC and its subsidiaries.

Reinsurance transactions are entered into by Global Atlantic Assurance Limited, Global Atlantic Re Limited, Commonwealth Annuity and Life Insurance Company, First Allmerica Financial Life Insurance Company or one of their affiliates. Reinsurance is placed, where required by applicable law, by Global Atlantic Risk Advisors, L.P., a licensed reinsurance intermediary and subsidiary of The Global Atlantic Financial Group LLC.

ICR Inc.

GlobalAtlantic@icrinc.com

(203) 682-8268

Source: Global Atlantic Financial Group

FAQ

What is the recent reinsurance transaction announced by Global Atlantic Financial Group?

Global Atlantic closed a $10 billion reinsurance deal with Manulife Financial Corporation.

What type of insurance business does the reinsurance transaction cover?

The reinsurance transaction covers Manulife's life, annuity, and long-term care insurance business in the US and Japan.

How many block transactions has Global Atlantic executed with Manulife?

The reinsurance deal represents the third block transaction between Global Atlantic and Manulife.

What assets under management are supporting the reinsurance transaction?

General account assets under management supporting the transaction at closing are approximately $10 billion.

What does Global Atlantic retain in the reinsurance transaction with Manulife?

Global Atlantic retains the underlying spread-based risks on the subset of the block involving the LTC business.

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