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Munich Re makes $3.2 billion long-term care reinsurance deal in-force

The arrangement cuts Manulife’s cumulative sensitivity to long-term care morbidity by 24%, and the first-year earnings impact is about USD 30 million, declining over time.

Reported · Written up by our desk · Industry & Deals

Munich American Reassurance Company, Munich Re’s US life reinsurance subsidiary, has made in-force its previously announced long-term care reinsurance transaction with Manulife Financial Corporation, covering a USD 3.2 billion block of Manulife’s long-term care policies.

According to Reinsurance News, the deal transfers biometric risk to Munich Re and is designed to help Manulife reduce the risk profile of its in-force portfolio, including a 24% reduction in Manulife’s cumulative sensitivity to long-term care morbidity.

The transaction was priced similarly to Manulife’s prior reinsurance deals and includes a modest negative 5% cede, which Manulife said supports its reserves and assumptions.

For Manulife, the agreement is described as largely capital-neutral, with an immaterial impact on core earnings and net income attributable to shareholders of about USD 30 million in the first year, declining over time, and it is the firm’s third long-term care reinsurance transaction.

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