Manulife has announced three reinsurance transactions on its legacy businesses, as well as plans to launch a Normal Course Issuer Bid and an increase to its common share dividend.
The company has revealed that its subsidiaries have entered agreements with “highly rated counterparts” to reinsure about $8 billion of policy liabilities related to legacy US group pay-out annuities to Jackson National Life Insurance, another $4 billion of policy liabilities related to legacy US individual pay-out annuities to RGA Reinsurance, and the mortality and lapse risk on about $1 billion of policy liabilities related to Canadian legacy universal life insurance business to RGA Life Reinsurance Company of Canada.
These transactions are expected to release a total of more than $1 billion in capital over the next 12 months, a release said.
“We expect that more than $1 billion in capital will be released as a result of these transactions, marking an important milestone in optimizing our portfolio and representing significant progress towards our $5 billion target by 2022,” said Manulife president and CEO Roy Gori.
Manulife also announced that it intends to launch a Normal Course Issuer Bid (NCIB), permitting the purchase for cancellation of up to 40 million of the insurer’s common shares. As of October 31, 2018, the company had 1,984,717,426 common shares issued and outstanding.
The company’s board of directors have additionally announced an increase of 14% (3 cents per share) to its quarterly common shareholders’ dividend. This will result in a dividend of $0.25 per share on the common shares of Manulife.
“We are also pleased to continue our policy of progressive dividend increases and intend to launch a share buy-back program to provide flexibility to deploy capital when market prices do not reflect the underlying value of our business,” Gori added in his statement.