Manulife announces $3.2 billion long-term care reinsurance transaction with Munich Re

Rhea-AI Summary

Manulife (TSX/NYSE/PHX: MFC) has agreed to reinsure biometric risk on a block of long-term care (LTC) policies with $3.2 billion of IFRS reserves (at 80% quota share) to Munich Re Life US, a subsidiary of Munich Re Group. The deal is Manulife's third LTC reinsurance transaction in under three years and its first on a standalone LTC block. The transaction provides full risk transfer on the biometric risk, with no asset transfer, and is expected to close in Q4 2026 pending regulatory approvals.

According to Manulife, once this and prior LTC reinsurance transactions close, LTC morbidity sensitivity will be cumulatively reduced by 24%. Pricing is described as similar to prior deals, with a modest negative 5% cede. The transaction is expected to be largely neutral to capital, with an immaterial annual impact on both core earnings and net income attributed to shareholders of about $30 million in the first year, decreasing over time.

Positive

• $3.2B LTC reserves biometric risk reinsured to Munich Re Life US
• Full biometric risk transfer on LTC block with no asset transfer
• Cumulative LTC morbidity sensitivity reduced by 24% upon closing
• Transaction described as largely capital neutral
• Pricing similar to prior LTC deals with modest negative 5% cede

Negative

• Immaterial but negative impact of about $30M on first-year core earnings and net income attributed to shareholders
• Transaction closing remains subject to regulatory approvals expected in Q4 2026

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• Company's third LTC reinsurance transaction and first on a standalone LTC block, highlighting Manulife's ability to transact in various structures
• Full risk transfer on the biometric risk with no asset transfer
• Upon closing, Manulife will have cumulatively reduced LTC risk by 24%

TORONTO, Aug. 5, 2026 /PRNewswire/ -- Manulife Financial Corporation ("Manulife" or the "Company") announced today that it has agreed to reinsure biometric risk¹ on a block of long-term care ("LTC") policies with $3.2 billion of reserves² to Munich American Reassurance Company ("Munich Re Life US"), a subsidiary of Munich Re Group, highlighting the Company's continued efforts to reduce the risk profile of its inforce portfolio. The transaction is expected to close in Q4 2026 pending regulatory approvals.

Key highlights of the transaction include:

• Full risk transfer on biometric risk³ on $3.2 billion of LTC reserves to Munich Re Life US
• Inclusive of our previous LTC reinsurance transactions⁴, upon closing Manulife will have cumulatively reduced LTC morbidity sensitivity by 24%⁵
• Similar pricing to prior deals, with a modest negative 5% cede⁶, further validating reserves and assumptions
• Transaction largely neutral to capital, with immaterial annual impact to both core earnings and net income attributed to shareholders of ~$30 million in the first year and reducing over time⁷

"Today's announcement represents our third LTC reinsurance transaction in under three years and first on a standalone LTC block, reflecting our ability to reduce our risk profile and strengthen our business through innovative actions. Looking ahead, we continue to see meaningful opportunities to improve our long-term care portfolio through organic initiatives that will enhance risk-adjusted returns and generate significant shareholder value."

- Phil Witherington, President & Chief Executive Officer, Manulife

Slides related to this announcement are included as part of the 2Q26 earnings presentation available here: 2Q26 results presentation 

About Manulife

Manulife Financial Corporation is a leading international financial services provider, headquartered in Toronto, Canada. Anchored in our ambition to be the number one choice for customers, we operate as Manulife across Canada and Asia, and primarily as John Hancock in the United States, providing financial advice, insurance and health solutions for individuals, groups and businesses. Through Manulife Wealth & Asset Management, we offer global investment solutions, financial advice, and retirement plan services to individuals, institutions, and retirement plan members worldwide. At the end of 2025, we had more than 37,000 employees, over 106,000 agents, and thousands of distribution partners, serving over 37 million customers with operations across 25 markets globally. We trade as 'MFC' on the Toronto, New York, and Philippine stock exchanges, and under '945' on the Hong Kong stock exchange.

About Munich Re Life US

Munich Re Life US, a subsidiary of Munich Re Group, is a leading US reinsurer with a significant market presence and extensive technical depth in all areas of life and disability reinsurance. Beyond vast reinsurance capacity and unrivaled risk expertise, the company is recognized as an innovator in digital transformation and aims to guide carriers through the changing industry landscape with dynamic solutions insightfully designed to grow and support their business. Munich Re Life US also offers tailored financial reinsurance solutions to help life and disability insurance carriers manage organic growth and capital efficiency as well as M&A support to help achieve transaction success.

Non-GAAP and other financial measures

Manulife prepares its Consolidated Financial Statements in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. We use a number of non-GAAP and other financial measures to evaluate overall performance and to assess each of our businesses. Core earnings is a non-GAAP financial measure. For more information on the non-GAAP financial measures and non-GAAP ratios in this document please see section E3 "Non-GAAP and other financial measures" of the 2Q26 MD&A which is incorporated by reference and available on the SEDAR+ website at www.sedarplus.com.

Caution regarding forward-looking statements

This document contains forward-looking statements within the meaning of the "safe harbour" provisions of Canadian provincial securities laws and the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding the expected timing and closing of the reinsurance transaction described herein and its expected impact and future opportunities to improve our long-term care portfolio.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Important factors and assumptions that could cause actual results to differ materially from expectations include but are not limited to the receipt of required regulatory approvals, satisfaction of customary closing conditions, the accuracy of actuarial assumptions and reserve estimates, changes in economic, market or regulatory conditions, the accuracy of information received from counterparties and the ability of counterparties to meet their obligations. Additional information regarding material risk factors may be found in our most recent annual and interim reports and other filings with Canadian and U.S. securities regulators.

The forward-looking statements in this document are stated as of the date hereof and, except as required by law, we do not undertake to update any forward-looking statements.

Media Inquiries

Fiona McLean
(437) 441-7491
fiona_mclean@manulife.com

Investor Relations

Derek Theobalds
(416) 254-1774
derek_theobalds@manulife.com

_________________________________________
Note: All figures and estimates are based on June 30, 2026, position, unless otherwise noted, and are expressed in Canadian dollar, based on exchange rate of US$1:00 to C$1.41875. Foregone core earnings and net income attributed to shareholders impacts based on exchange rate of US$1:00 to C$1.38398.
1	IFRS reserve figure of C$3.2B at 80% quota share.
2	IFRS reserve figure of C$3.2B at 80% quota share, reflecting IFRS 17 current estimate of present value of future cash flows + risk adjustment + contractual service margin.
3	IFRS reserve figure of C$3.2B at 80% quota share.
4	Refers to the $13 billion reinsurance transaction, including $6 billion of LTC, with Global Atlantic that was announced in December 2023 and closed in February 2024 and the $5.4 billion reinsurance transaction with RGA, including $2.4 billion of LTC that was announced in November 2024 and closed in January 2025.
5	Impact of a change in reserves would be reported through the contractual service margin, net income attributed to shareholders, and other comprehensive income attributed to shareholders. In reference to the cumulative reduction in LTC morbidity sensitivity across all three transactions at the time of the respective announcement. Note sensitivity for this transaction based on 2Q26. Transaction is expected to close in 4Q26 pending regulatory approvals.
6	On IFRS basis.
7	Core earnings is a non-GAAP financial measure.

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SOURCE Manulife Financial Corporation

FAQ

What is Manulife (MFC) announcing in its $3.2 billion long-term care reinsurance deal with Munich Re?

Manulife is reinsuring biometric risk on a long-term care block with $3.2 billion of IFRS reserves to Munich Re Life US. According to Manulife, this standalone LTC transaction transfers biometric risk without asset transfer and is expected to close in Q4 2026 pending regulatory approvals.

How does the Munich Re reinsurance transaction affect Manulife’s long-term care risk exposure (MFC)?

The transaction will reduce Manulife’s LTC morbidity sensitivity as part of a broader program. According to Manulife, including this and two prior LTC reinsurance deals, LTC morbidity sensitivity will be cumulatively reduced by 24% upon closing, based on 2Q26 sensitivities.

What is the financial impact of the $3.2 billion LTC reinsurance deal on Manulife’s earnings and capital?

The deal is expected to be largely neutral to capital while slightly lowering earnings. According to Manulife, it will have an immaterial annual impact of about $30 million on core earnings and net income attributed to shareholders in the first year, decreasing over time.

When is Manulife’s long-term care reinsurance transaction with Munich Re expected to close?

The LTC reinsurance transaction is expected to close in Q4 2026, subject to regulatory approvals. According to Manulife, figures and estimates are based on the position as of June 30, 2026, and the deal structure reflects an 80% quota share on biometric risk.

What does a modest negative 5% cede mean in Manulife’s Munich Re LTC reinsurance deal?

The company indicates pricing is similar to earlier LTC reinsurance transactions, with a modest negative 5% cede on an IFRS basis. According to Manulife, this helps validate reserves and assumptions while transferring biometric risk on $3.2 billion of LTC reserves at 80% quota share.

How does this Munich Re LTC deal compare to Manulife’s previous LTC reinsurance transactions?

This is Manulife’s third LTC reinsurance deal in under three years and first on a standalone LTC block. According to Manulife, earlier transactions included LTC exposure with Global Atlantic and RGA, and together all three deals reduce LTC morbidity sensitivity by 24% upon closing.

Does the $3.2 billion LTC reinsurance transaction change Manulife’s core earnings guidance?

Manulife characterizes the impact as immaterial, implying limited effect on overall guidance. According to Manulife, the transaction is expected to reduce both core earnings and net income attributed to shareholders by about $30 million in the first year, with the impact declining over time.