The deal, initially announced in May 2023, involves Global Atlantic assuming reinsuring responsibilities for a diverse portfolio of MetLife’s US retail annuity and life insurance business.
The transaction bolsters Global Atlantic’s standing as a leading reinsurer within the annuity and life insurance marketplace, according to statements from the Group. As part of the agreement’s terms, MetLife has transferred general account assets for the specified block to Global Atlantic subsidiaries, namely First Allmerica Financial Life Insurance Company and Commonwealth Annuity and Life Insurance Company.
The specifics of the deal include MetLife transferring $14 billion of US retail life insurance reserves, encompassing universal life, variable universal life, and universal life with secondary guarantees. Additionally, $5.2 billion of fixed annuity reserves have been transferred to Global Atlantic. At the time of the initial signing, Global Atlantic’s general account assets supporting the transaction amounted to approximately $13 billion.
This landmark agreement not only signifies a substantial financial move for both MetLife and Global Atlantic but also highlights the dynamism within the insurance and reinsurance sectors, showcasing the strategic positioning of key players in response to evolving market dynamics.
Speaking about the move, MetLife President and CEO, Michel Khalaf, said: “We are pleased to have closed this transaction, which illustrates MetLife’s capacity to execute as well as our commitment to reduce enterprise risk and deploy capital to its highest and best use.”
Manu Sareen, Co-President and Head of Institutional Markets for Global Atlantic, said the collaborative spirit between the two companies in comprehending MetLife’s financial objectives and addressing its risk transfer needs. This collaboration underscores the strategic alignment and shared goals of both MetLife and Global Atlantic in navigating the dynamic landscape of financial services.
The reinsurance agreement between MetLife and Global Atlantic has been appraised at around $3.25 billion. Under this arrangement, MetLife stands to receive a ceding commission of $2.25 billion, accompanied by a release of $1 billion in capital.
DMetLife’s Board of Directors has greenlit an additional $1 billion for share repurchases. This approval brings the total outstanding share repurchase authorization to an impressive $4 billion.
Despite the reinsuring of policies, MetLife is set to retain its role as the administrator and service provider. Moreover, MetLife Investment Management will take charge of a substantial portion of the assets under a five-year investment management agreement.
Author: Joanna England
