Q: "Global Atlantic Announces $10 Billion Block Reinsurance Agreement with Manulife Across Both US and Japan Business" - Please explain the significance of this for MFC share price outlook. Thank you.
5i Research Answer:
MFC has agreed with Global to reinsure $13B in reserves, including $6B in long term reserves. This frees up capital requirements for MFC, and it said it plans to fully return the $1.2B capital release to shareholders via share buybacks. It will also add 1c to EPS. The deal represents 14% of MFC's overall reserve book. A good move, though not hugely material with only a 1-cent earnings share impact. Still, it does reduce overall risks to the company.