Manulife Financial Corp. says it has struck another deal to off-load lower-return assets through a $5.4-billion reinsurance deal.
The insurer says the agreement with Reinsurance Group of America includes $2.4 billion of long-term care reserves, which can be more challenging to transfer because they’re seen as higher risk.
Reinsurers take on the risk of insurance policies, and a chunk of their premiums, helping insurers like Manulife free up capital.
The latest deal follows two other big reinsurance deals for Manulife in the past year, including a $13-billion agreement last December that also included long-term care, and a $5.8-billion deal in March.
Chief executive Roy Gori says in a statement that the company is unlocking shareholder value with a second long-term care deal to help it shift its portfolio towards higher return and lower risk.
Manulife says the deal should release $800 million in capital that it plans to return to shareholders through share buybacks.