Canada's Manulife signs C$5.4 bln reinsurance deal to lower risk

Reuters11-21 06:05

UPDATE 1-Canada's Manulife signs C$5.4 bln reinsurance deal to lower risk

Adds context on long-term care business in paragraphs 2-3, detail on buyback plan in paragraph 5

Nov 20 (Reuters) - Canada's Manulife Financial MFC.TO will reinsure C$5.4 billion ($3.86 billion) of its reserves as it looks to transfer some risk from its portfolio and free up capital for stock buybacks.

The agreement with Reinsurance Group of America RGA.N covers C$2.4 billion of long-term care reserves, Manulife said on Wednesday.

Long-term care insurance is considered a high-risk business as it involves coverage for people with chronic or disabling conditions who need constant care, typically found in individuals over 65.

Insurers maintain reserves to pay out claims by policyholders. By reinsuring those reserves, they can transfer some of those obligations and unlock capital to underwrite additional policies or return capital to shareholders.

Manulife said the latest deal will free up C$800 million of capital for buybacks.

Earlier this year, it had clinched a reinsurance deal with RGA Life Reinsurance Company of Canada for C$5.8 billion of reserves.

($1 = C$1.3976)

(Reporting by Niket Nishant in Bengaluru; editing by Alan Barona)

((Niket.Nishant@thomsonreuters.com))

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