Manulife sells Life Retrocession business

Manulife Financial has entered into an agreement to sell its Life Retrocession business to Pacific Life Insurance, subject to regulatory approvals. The deal is expected to close during the third quarter 2011.

Manulife’s Life Retrocession business has approximately 90 employees in offices in Toronto, Boston, Barbados and Cologne. It assumes risk from life reinsurers and has net life insurance in-force of US$106 billion.

“Although this business is profitable, it does not have a growth profile acceptable to us,” said Donald Guloien, chief executive officer. “Also, as a result of more restrictive Canadian regulatory requirements for this business, a buyer in another jurisdiction can operate this business with less capital. The transaction releases capital which will be reinvested in higher growth businesses or to reduce leverage.”

Because the reinsurance business requires substantial capital reserves, its sale will improve Manulife’s Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio by about six percentage points. After tax, the sale is expected to bring in $275 million for Manulife.

Guloien emphasized Manulife remains committed to its remaining reinsurance businesses—Property and Casualty Retrocession and International Employee Benefits Management—as these continue to provide good earnings profiles.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.