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Life Health > Long-Term Care Planning

Manulife Hopes for Another Hancock LTC Reinsurance Deal

By Allison Bell

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Manulife Financial believes it has a chance to find a reinsurer for a $4 billion block of long-term care insurance business written by the company’s John Hancock unit.

Marc Costantini, Manulife’s global head of in-force insurance policy management, talked about hopes for the block today, during a conference call with securities analysts.

“We don’t talk about what’s forthcoming, but we do have interest in the block,” Costantini said.

The policies in the block are performing well, and that creates a “positive halo” for the block and the company, Costantini said.

What it means: A big new John Hancock long-term care insurance reinsurance deal could help lead to a revival in the U.S. stand-alone LTCI market, by increasing confidence in issuers that they will have some flexibility if they decide to change course.

The backdrop: John Hancock was one of the pillars of the U.S. long-term care insurance market. It was acquired by Manulife, a Toronto-based company, in 2004.

Like other LTCI issuers, Hancock made inaccurate assumptions about how LTCI policies would perform. It eventually stopped selling LTCI coverage. It continues to be a major U.S. provider of life insurance.

In February, it completed a highly publicized reinsurance deal with Global Atlantic. Global Atlantic assumed reinsurance for Manulife life insurance policies backed by $5.6 billion in assets and U.S. LTCI policies backed by $4.4 billion in assets.

“It was a very substantial transaction for us and the industry,” Costantini said. “It validated, obviously, our assumptions on our balance sheet tied to LTC, and it really created a lot of interest in our business and Manulife.”

The $4 billion block of LTCI policies now attracting interest is similar to the block involved in the Global Atlantic deal, Costantini said.

Earnings: Manulife held the conference call to go over earnings for the first quarter.

Total earnings fell to $634 million on $4.8 billion in insurance revenue, based on current Canadian dollar exchange rates, from $1 billion on $4.2 billion in insurance revenue in the first quarter of 2023.

U.S. insurance sales increased to $286 million in U.S. dollars, from $257 million in the year-earlier quarter.

Credit: iStock

Allison Bell

Think_Allison

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