MetLife, Inc. announced it has entered into an agreement with Global Atlantic Financial Group (Global Atlantic), a retirement and life insurance company, to reinsure approximately $19.2 billion of U.S. retail universal life, variable universal life, universal life with secondary guarantees, and fixed annuity statutory reserves.
The combined value of the transaction is expected to be approximately $3.25 billion with a ceding commission of $2.25 billion and $1 billion of capital that will be released. In addition, MetLife’s Board of Directors has approved a $1 billion increase in the company’s share repurchase authorization. This is incremental to the $3 billion authorization announced earlier in May 2023, and brings MetLife’s total share repurchase authorization outstanding to roughly $4 billion.
The planned reinsurance transaction with Global Atlantic is aligned with MetLife’s disciplined evaluation of risk transfer options within MetLife Holdings, the closed-block businesses of the company’s former U.S. Retail segment. The transaction will accelerate the run-off of MetLife’s legacy business and is the latest tactical milestone in executing across the company’s Next Horizon strategic pillars of focus, simplify and differentiate.
MetLife anticipates that the transaction will positively impact several key financial metrics. These include adding to the company’s adjusted earnings per diluted share and contributing to the company’s 13% to 15% adjusted return on equity target.
“This transaction is another critical step in creating long-term value for our shareholders and for all our stakeholders," said MetLife President and CEO Michel Khalaf. “It will reduce enterprise risk and enable us to further invest in responsible growth while also returning capital to our shareholders — underscoring our financial strength and our balanced approach to capital management.”
Agreement summary
- MetLife plans to reinsure approximately $19.2 billion U.S. retail life insurance and fixed annuity statutory reserves with Global Atlantic, including $14 billion of U.S. retail life insurance comprised of universal life, variable universal life, and universal life with secondary guarantees, and $5.2 billion of fixed annuities.
- As part of MetLife’s ongoing commitment to its policyholders, the company will continue to be responsible for all customer-related functions.
- MetLife Investment Management secured a mandate to manage a significant amount of the assets under a five-year investment management agreement.
- The reinsurance transaction is structured on a coinsurance and modified coinsurance basis.
- The transaction is expected to close in the second half of 2023. The consummation of the closing under the agreement is subject to the satisfaction or waiver of customary closing conditions specified in the agreement, including the receipt of required regulatory approvals.
Advisors
Organizations representing MetLife on this transaction include Goldman Sachs & Co. LLC (financial advisor) and Willkie Farr & Gallagher LLP (legal counsel).
