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Manulife closes $3.2 billion long-term care reinsurance deal with Munich Re

Manulife closes $3.2 billion long-term care reinsurance deal with Munich Re

Money Moves

Third long-term care de-risking deal in under three years cuts Manulife's exposure to care-cost risk by 24%.

Yesterday: Munich Re transaction closes

Overview

Updated 1 hour ago

Manulife handed Munich Re the biometric risk on C$3.2 billion of long-term care reserves in a deal that closed Oct. 1. Munich Re now carries the morbidity, mortality and lapse risk on that block, while Manulife keeps the invested assets backing it.

It is Manulife's third long-term care reinsurance transaction in under three years and its first on a standalone long-term care block. Together the three deals cut the insurer's sensitivity to long-term care claims by 24%, and Manulife paid Munich Re a modest fee to take the risk — validating the reserves rather than offloading a distressed liability.

Why it matters

Manulife is offloading the riskiest part of its legacy insurance book to Munich Re, cutting its exposure to rising long-term care costs by 24%.

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Key Indicators

C$3.2B
Long-term care reserves reinsured to Munich Re
At 80% quota share of IFRS reserves, based on the June 30, 2026 position.
24%
Cumulative cut in long-term care morbidity sensitivity
Across all three reinsurance transactions since December 2023.
80%
Quota share ceded to Munich Re
Munich Re assumes 80% of the biometric risk on the block.
3
Long-term care reinsurance transactions since 2023
With Global Atlantic, RGA and Munich Re.

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People Involved

PW
Phil Witherington
President and chief executive officer, Manulife
Leading Manulife's long-term care de-risking program

Organizations Involved

Manulife Financial Corporation
Manulife Financial Corporation
Life insurance company
Toronto-based insurer shedding legacy long-term care risk

Toronto-based life insurer transferring C$3.2 billion of long-term care reserves to Munich Re.
Munich American Reassurance Company (Munich Re Life US)
Munich American Reassurance Company (Munich Re Life US)
Reinsurer
Counterparty taking on C$3.2 billion of long-term care risk

U.S. subsidiary of Munich Re Group, one of the world's largest reinsurers.

Timeline

December 2023 October 2026

6 events Latest: Yesterday
Tap a bar to jump to that date

  1. Munich Re transaction closes

    Latest Transaction

    Cession is effective July 1, 2026, at an 80% quota share, with full transfer of biometric risk.

  2. Manulife announces Munich Re deal

    Announcement

    Agrees to reinsure C$3.2 billion of long-term care reserves, its first standalone long-term care cession.

  3. RGA transaction closes

    Transaction

    Second long-term care cession takes effect.

  4. Manulife announces RGA deal

    Announcement

    Agrees to reinsure C$5.4 billion of reserves, including C$2.4 billion of long-term care.

  5. Global Atlantic transaction closes

    Transaction

    Manulife's first long-term care de-risking deal takes effect.

  6. Manulife announces Global Atlantic deal

    Announcement

    Agrees to reinsure C$13 billion of reserves, including C$6 billion of long-term care.

Scenarios

1

Manulife signs a fourth long-term care reinsurance deal

Possible Resolves by Jan 31, 2028

Discussed by: InsuraBeat, which frames the Munich Re deal as part of a cumulative de-risking program

Manulife has cut long-term care morbidity sensitivity by 24% across three deals and may keep going. Reinsurers are now willing to price standalone long-term care risk on its own terms, which could support further cessions if Manulife wants to shrink its legacy book further.

2

Ceded block performs as priced, validating Manulife's reserves

Likely Resolves by Feb 28, 2027

Discussed by: Manulife's own framing; the negative 5% cede and capital neutrality suggest a paid-for reserve validation

If claims on the block track assumptions, the negative cede works as intended. Manulife paid for an independent check on its reserves, and the earnings drag stays immaterial, around C$30 million in the first year and shrinking over time.

3

Morbidity on the ceded block runs hotter than priced

Unlikely Resolves by Q2 2028

Discussed by: Analysts watching long-term care claims data; a new industry experience study could surface adverse trends

Long-term care claims have historically run hotter than insurers priced for. If the ceded block's experience deteriorates, Munich Re takes the loss, but it could also signal that Manulife's remaining long-term care exposure is underpriced.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

2010s

U.S. long-term care pricing crisis (2010s)

U.S. insurers misjudged how often policyholders would claim on long-term care policies and how long they would collect, then raised premiums sharply as losses mounted. Industry data showed long-term care services spending at about 1% of GDP in 2010, and the market consolidated to roughly 100 companies, with 15 to 20 selling most policies.

Then

Regulators and carriers repriced policies, often to the dismay of existing policyholders.

Now

The experience produced better claims data, which is now letting reinsurers underwrite standalone long-term care risk on normal terms.

Why this matters now

Explains why long-term care is the riskiest line on Manulife's books and why Munich Re could now price a standalone long-term care block on ordinary terms.

December 2023 – February 2024

Global Atlantic reinsurance transaction (2023–2024)

Manulife agreed in December 2023 to reinsure C$13 billion of reserves to Global Atlantic, including C$6 billion of long-term care. The bundled deal closed in February 2024.

Then

Cut Manulife's long-term care exposure for the first time.

Now

Established the template for later, standalone long-term care cessions.

Why this matters now

The first of three transactions that have cumulatively cut Manulife's long-term care sensitivity by 24%.

November 2024 – January 2025

RGA reinsurance transaction (2024–2025)

Manulife announced in November 2024 a C$5.4 billion reinsurance deal with RGA, including C$2.4 billion of long-term care. It closed in January 2025.

Then

Further reduced Manulife's long-term care risk.

Now

Kept the de-risking program moving toward a standalone long-term care cession.

Why this matters now

The second step in the same cumulative program that the Munich Re deal completes or extends.

Sources

(5)
+1
PR Newswire Manulife InsuraBeat StockTitan PR Newswire