The relationship between Manulife and RGA, a subsidiary of the Chesterfield, Missouri-based Reinsurance Group of America Inc., is established, marked by two previous transactions.
The anticipated completion of this latest deal early in the second quarter is expected to contribute an additional 1 Canadian cent to Manulife’s core earnings per share on an annualized basis after the effect of the share buybacks is accounted for.
The policies involved in this transaction are described as “very long-term and provide guaranteed pricing for the policyholder,” making this block particularly significant for reinsurance, according to TD Securities analyst Mario Mendonca.
RGA’s participation in the deal is facilitated by its unique balance sheet management practices, which differ from Manulife’s approach.
“RGA has ‘different internal targets, a different internal management approach and different assets backing the liability,’” Marc Costantini, global head of inforce management at Manulife, explained in an interview.
