Leading financial services company Global Atlantic Financial Group and life insurer MetLife, Inc. entered into a reinsurance agreement worth $19.2 billion.
The deal will see Global Atlantic transform a diversified portfolio of MetLife’s US retail annuity and life insurance businesses, strengthening Global Atlantic’s position as a leading reinsurer in the annuity and life insurance marketplace.
Manu Sareen, Co-President and Head of Institutional Markets for Global Atlantic, highlighted the collaborative effort between the two companies to understand MetLife’s financial goals and risk transfer needs. This has enabled the development of a custom and comprehensive solution that aligns with Global Atlantic’s expertise in managing both spread and chargeable loans.
Under the terms of the agreement, MetLife will transfer $14 billion in US retail life insurance reserves, consisting of universal life, variable universal life, and universal life with secondary guarantees, along with $5.2 billion fixed annuity reserves in Global Atlantic.
At the time of closing, Global Atlantic’s total account assets under management supporting the transaction will be approximately $13 billion.
The combined value of the reinsurance agreement is estimated to be approximately $3.25 billion, with MetLife receiving a ceding commission of $2.25 billion and $1 billion in released capital.
Additionally, as part of its commitment to enhancing shareholder value, MetLife’s Board of Directors authorized an additional $1 billion for share repurchases, bringing total outstanding share repurchase authorizations to nearly $4 billion.
MetLife President and CEO, Michel Khalaf, expressed his enthusiasm about the agreement, saying, “This transaction is another critical step in creating long-term value for our shareholders and for all of our stakeholders. This reduces business risk and enables us to invest more in responsible growth while also returning capital to our shareholders – underpinning our financial strength and our balanced approach to capital management .
MetLife expects the transaction to have a positive impact on key financial metrics, including contributing to adjusted earnings per diluted share and supporting the company’s target of 13% to 15% adjusted return on equity.
Goldman Sachs & Co. LLC acted as MetLife’s financial advisor for this transaction, and legal counsel was provided by Willkie Farr & Gallagher LLP.
Barclays Capital Inc. acted as financial advisor, while Sidley Austin LLP served as Global Atlantic’s legal counsel for this transaction.
Completion of the reinsurance transaction is expected to occur in the second half of 2023, subject to the fulfillment of customary closing conditions and regulatory approvals.