Munich Re has taken on the full biometric risk of a CA$3.2 billion block of long-term care policies from Manulife Financial Corporation. The deal closed on October 1, with no transfer of assets.
Announced in August 2026, the transaction is, by Manulife's count, the company's third long-term care (LTC) reinsurance deal in under three years and its first on a standalone LTC block, with no other liability classes packaged alongside it. Earlier transactions with Global Atlantic and Reinsurance Group of America (RGA) each bundled LTC exposure alongside other lines. The Global Atlantic deal, closed in February 2024, included structured settlements and Japan whole life business. The RGA deal, announced in November 2024 and closed in January 2025, covered a structured settlements block alongside the LTC risk.
The standalone structure is where the deal's significance to the broader reinsurance market lies. Munich Re Life US, the group's US life reinsurance subsidiary, took on LTC morbidity risk without another line of business to cushion the volatility. The pricing held at terms consistent with prior transactions. The negative 5% cede on the LTC block means Manulife paid Munich Re above the reserve value to assume the risk, reflecting the reinsurer's return expectations on the capital it deployed. The RGA transaction, announced in November 2024, carried a negative 4% cede, while the Global Atlantic deal in 2024 carried a negative 5% cede. Across three transactions with different counterparties and block structures, the pricing range has stayed narrow.
Manulife structured the deal as an 80% quota share on a full risk-transfer basis and retained administration of the policies. Combined with the earlier transactions, the close brings Manulife's cumulative reduction in LTC morbidity sensitivity to 24%.
Consistent pricing across deals matters because LTC morbidity risk carries sources of uncertainty that resist precise modeling. Rate increase uncertainty is one of them. Regulators must approve premium increases on in-force LTC business, and approvals have historically lagged actuarial need.
Milliman's 2024 LTC rate increase survey, covering 17 carriers representing more than 75% of the industry by premium volume, found that only 73% of submitted rate increases were fully or partially approved. The top reason for rejection was political caps or non-actuarial factors.
By contrast, Manulife reported in its 2024 annual report that it had received approval for over 90% of the premium rate increases embedded in its reserves as of its 2022 actuarial assumption review. The company cited the result as further validation of its reserving approach. That track record informed Munich Re's comfort in pricing the standalone block.
Large-scale LTC reinsurance was largely absent from the market until recently. Milliman, in a February 2026 analysis of LTC mergers and reinsurance trends, described the market as having been very quiet for a number of years. The three large LTC transactions since late 2023 marked a clear uptick. Milliman identified 2026 and 2027 as years likely to sustain that momentum, with buyer confidence in valuing LTC risks continuing to build.
The Manulife-Munich Re deal gives other potential counterparties a cleaner reference point than earlier transactions did. A standalone block, priced and closed without support from simpler liabilities, narrows the range of assumptions about how the market values pure LTC biometric exposure.
Phil Witherington, president and chief executive officer of Manulife, said the close "reflects our ability to reduce our risk profile and strengthen our business through innovative actions." He pointed to further organic opportunities to improve the LTC portfolio's risk-adjusted returns, a sign that Manulife's ongoing portfolio optimization work is not yet finished.
