Global Atlantic Financial Group has signed a $10 billion block reinsurance agreement with Manulife Financial Corporation.

The Bermudian-based insurance company said it is the third block transaction Global Atlantic has executed with Manulife.

It said the deal showcases Global Atlantic’s unique ability to underwrite, structure and execute on multiple liabilities and across the global insurance market and includes Global Atlantic’s first block reinsurance transaction in Japan.

The transaction, signed between subsidiaries of the companies, will reinsure a seasoned and diversified block of Manulife’s life, annuity, and long-term care insurance business originated in the US and Japan.

Following a concurrent transaction where 100 per cent of the long-term care insurance risks are simultaneously reinsured with a highly rated third-party global reinsurer, Global Atlantic will only retain the underlying spread-based risks on the subset of the block that involves the LTC business.

Similar to Global Atlantic’s other spread-based reinsurance transactions, the company said, the predictable nature of the retained risks makes this an attractive profile for Global Atlantic and Ivy II, its co-investment vehicle.

Global Atlantic said the company has established a 20-year track record, successfully completing more than 40 transactions with nearly 30 clients and reinsuring more than $140 billion of assets since inception.

“Throughout this process, we partnered closely with Manulife teams in Canada, the US and Japan to gain a strong understanding of their goals” said Manu Sareen, co-president of Global Atlantic.

“Due to our organisations’ close collaborative process, we were able to develop a tailored solution that aligns with all parties’ strategic objectives.

“Our innovative LTC structure separates the insurance risks from the underlying investment and spread-based risk, and enables Global Atlantic to reinsure the insurance risks to a highly regarded reinsurance partner.

“With this structure, our retained liability cash flows on this part of the transaction are not subject to any lapse, longevity or morbidity risks.”

The company said the block currently has approximately $10 billion in general account assets across multiple product lines including payout annuities, whole life policies and long-term care policies.

It said the Japan whole life block represents approximately $4 billion equivalent assets making the transaction one of the largest Japanese reinsurance deals in recent history and further advancing Global Atlantic’s presence and commitment across Asia.

Global Atlantic will retrocede the long-term care insurance risk to a well-established and highly rated third-party reinsurer.

Under the terms of the agreement, Manulife will reinsure the blocks and transfer general account assets to Global Atlantic. Manulife will also retain servicing and administration of the policies.

The transaction is expected to close in the first half of 2024, subject to satisfaction or waiver of customary closing conditions specified in the agreement, including the receipt of required regulatory approvals.