In a deal that will make it
North America’s biggest provider of life retrocession insurance, US
insurer Pacific Life Corporation’s Pacific Life Re unit is to
acquire Canadian insurer Manulife Financial’s life retrocession
business unit, Manulife Life Retrocession, for an unspecified
amount.
The acquisition of Manulife
Life Retrocession will bring with it a portfolio of about $106bn of
individual life reinsurance by face value. This will give Pacific
Life Re a market share of about 41% in North America after the
deal.
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Pacific Life Re, noted
Pacific Life chairman, president and CEO James T Morris, has
operated since 2002 and is focused on providing life reinsurance
solutions and support to insurance clients in the UK, Ireland and
Asia. Manulife Life Retrocession has offices in Toronto, Boston,
Barbados and Cologne.
Explaining the rationale
behind Manulife’s decision to sell Manulife Life Retrocession, the
Canadian insurer’s CEO Donald Guloien said: “The life retrocession
business does not align with Manulife’s strategy because of changes
in the life reinsurance market. Although this business is
profitable, it does not have a growth profile acceptable to
us.”
Guloien continued that
because of the more restrictive regulatory requirements for life
retrocession business that have been introduced in Canada, an
insurer in another jurisdiction will be able to operate the
business with less capital.
“The transaction releases
capital which will be reinvested in higher growth businesses or to
reduce leverage [debt to equity level],” Guloien said.
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By GlobalDataManulife anticipates that the
transaction will result in an after-tax gain of about C$275m
($287m).
Pacific Life reported total revenue of $5.6bn in 2010, up
7.7% from $5.2bn in 2009, while net income increased by 26.2% to
$530m. Total assets at the end of 2010 stood at $116bn.
