C$ unless otherwise stated
TORONTO, July 18, 2011 – Manulife Financial Corporation (Manulife) announced today that it has entered into an agreement to sell its Life Retrocession business to Pacific Life Insurance Company (Pacific Life), based in the United States. The transaction is subject to standard closing conditions including receipt of regulatory approvals and is expected to close during the third quarter 2011.
“The Life Retrocession business does not align with Manulife’s strategy because of changes in the life reinsurance market going forward,” said Donald Guloien, Chief Executive Officer. “Although this business is profitable, it does not have a growth profile acceptable to us. Also, as a result of more restrictive Canadian regulatory requirements for this business, a buyer in another jurisdiction can operate this business with less capital. The transaction releases capital which will be reinvested in higher growth businesses or to reduce leverage,” added Mr. Guloien.
The transaction is expected to result in an after-tax gain on sale of approximately $275 million. The reduction in on-going annual earnings from the sale will not be material to our consolidated financial results. The transaction, when completed, is expected to increase the Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio of Manulife’s key operating subsidiary, The Manufacturers Life Insurance Company, by approximately six percentage points. This MCCSR ratio was 243 per cent as of March 31, 2011.
Manulife’s Life Retrocession business has approximately 90 employees in offices in Toronto, Boston, Barbados and Cologne. The unit assumes risk from life reinsurers and has net life insurance in-force of US$106 billion.
This transaction does not impact Manulife’s other Reinsurance business units, which focus on Property and Casualty Retrocession and International Employee Benefits Management.
“Our remaining Reinsurance businesses provide good earnings profiles and are not impacted by the Life Retrocession sale. We remain committed to these businesses,” Mr. Guloien noted.
About Manulife Financial
Manulife Financial is a leading Canadian-based financial services group operating in 22 countries and territories worldwide. For more than 120 years, clients have looked to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We provide asset management services to institutional customers worldwide as well as reinsurance solutions, specializing in life and property and casualty retrocession. Funds under management by Manulife Financial and its subsidiaries were Cdn$478 billion (US$492 billion) as at March 31, 2011. The Company operates as Manulife Financial in Canada and Asia and primarily as John Hancock in the United States.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.