Global Atlantic strikes reinsurance deal with MetLife

Bermuda registered Global Atlantic Financial Group has signed a $19.2 billion agreement with MetLife to reinsure a block of the US life insurance giant’'s retail annuity and life insurance business.

The deal will see MetLife reinsure $5.2 billion of fixed annuities and $14 billion of life insurance with two Global Atlantic subsidiaries. Global Atlantic general account assets under management supporting the transaction will be approximately $13 billion at closing, the company said.

MetLife will retain servicing and administration of the policies. Manu Sareen (pictured), co-president and head of institutional markets for Global Atlantic, said: "Throughout this transaction, we collaborated closely with MetLife to gain a strong understanding of their unique financial, risk transfer and counterparty objectives.

“Ultimately, we were able to develop a custom, comprehensive solution that addresses their needs and aligns well with our ability to manage both spread and fee-based liabilities.”

Global Atlantic said the deal meant it has reinsured more than $110 billion of assets in the annuity and life insurance marketplace since it was founded 20 years ago.

MetLife said the combined value of the reinsurance agreement is estimated to be approximately $3.25 billion, with MetLife receiving a ceding commission of $2.25 billion and $1 billion of released capital.

MetLife has also authorised an additional $1 billion for share repurchases, bringing the total outstanding share repurchase authorisation to approximately $4 billion.

MetLife’s president and chief executive officer, Michel Khalaf, said: “This transaction is another critical step in creating long-term value for our shareholders and for all our stakeholders. 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.”

Barclays Capital was financial advisor and Sidley Austin was legal counsel to Global Atlantic for the transaction while Metlife was advised by Goldman Sachs and legal counsel Willkie Farr & Gallagher.

The transaction is expected to close later this year, subject to closing conditions and regulatory approvals.