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Venerable to Reinsure $22B in John Hancock Variable Annuities

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What You Need to Know

  • The deal involves 76% of the John Hancock U.S. variable annuity block.
  • Most of the contracts have guaranteed minimum withdrawal benefits riders.
  • Venerable agreed to reinsure a $12 billion annuity block from Equitable about a year ago.

Venerable Holdings has agreed to reinsure more than 163,000 variable annuities that John Hancock sold in the United States from 2003 through 2012.

The annuities are backed by $22 billion in assets.

John Hancock is a Boston-based arm of Manulife Financial. The deal with Venerable involves 76% of Manulife’s exposure to U.S. variable annuity risk.

John Hancock would continue to administer the contracts, Manulife said.

The companies hope to close on the deal by March 31, 2022.

Naveed Irshad, the global head of in-force management at Manulife, said in a comment, included in the deal announcement, that Manulife is making the deal partly because it will reduce the company’s sensitivity to ups and downs in the stock market. A company analysis shows the deal will cut the losses resulting from a 30% drop in stock market returns on variable annuity guarantees by 54%.

Roy Gori, Manulife’s CEO, said the deal will also release about $2 billion in capital.

Venerable

Venerable is a privately held annuity block management company based in West Chester, Pennsylvania. It was created by a group led by affiliates of Apollo Global Management, Athene Holding and other companies.

The company will be using its Corporate Solutions Life Insurance Company subsidiary to reinsure the John Hancock annuities.

Venerable joined with Athene to reinsure $19 billion in annuities for Voya Financial in 2018.

More on this topic

Venerable announced a deal to reinsure $12 billion in annuities for Equitable about a year ago.

The John Hancock deal will increase Venerable’s assets under risk management to $94 billion, from $71 billion.

David Marcinek, Venerable chairman, said in a comment that the deal shows that the company is the partner of choice for variable annuity risk transfer arrangements.

“Manulife is a sophisticated counterparty with exacting risk management objectives,” Marcinek said.

The Annuity Block

The John Hancock block involved consists mainly of 143,000 contracts with guaranteed minimum withdrawal benefits riders, written outside New York state;about 20,000 contracts with guaranteed minimum death benefits riders, written outside New York state; and $2 billion in reserves.

John Hancock Life Insurance Company (U.S.A.) is the party now responsible for the annuities.

Comfort

Manulife said Venerable’s reinsurance obligations will be secured by a comfort trust.

The trust will get a deposit of about $1.3 billion in assets when the reinsurance deal closes, Manulife said.

Pictured: A screenshot from John Hancock’s website. (Image: John Hancock)