RGA Canada has announced the completion of a transaction with Manulife to reinsure the longevity risk from an in-force block of Canadian group payout annuities. In total, RGA Canada will reinsure the longevity risk for approximately 45,000 annuitants. The move is another step in Manulife’s strategy to release capital.

A reinsurer that is particularly active in the longevity insurance market, RGA said this transaction deepens its collaborative relationship with Manulife.

“We have a long-standing partnership with Manulife and we are proud to implement another customized solution to meet their financial objectives,” stated Alka Gautam, President and CEO, RGA Canada, in a Feb. 13 announcement.

John Laughlin, Executive Vice President, Global Financial Solutions, of parent company RGA, added, “This transaction once again demonstrates RGA’s expertise in longevity risk and our ability to execute transactions for our clients.”

The dollar amount of the risk being covered by this transaction was not disclosed.

Releasing capital

On Nov. 1, 2018, Manulife announced reinsurance transactions aimed at releasing $1 billion in capital. At that time, the company announced agreements to reinsure substantially all of its legacy U.S. individual and group pay-out annuity products, as well as mortality and lapse risk on a portion of its legacy universal life insurance policies in Canada.

"We expect that more than $1 billion in capital will be released as a result of these transactions, marking an important milestone in optimizing our portfolio and representing significant progress towards our $5 billion target by 2022," stated Manulife President & Chief Executive Officer Roy Gori in the Nov. 1 announcement.

Reinsuring such a large block of group annuity business is uncommon. However, these types of transactions are an increasing trend. Insurance Journal will feature a special report on longevity risk transfers in its January/February 2019 edition.