July 18 (Bloomberg) -- Manulife Financial Corp., Canada’s largest insurer, agreed to sell its life retrocession business to Pacific Life Insurance Co.
The sale of the unit that provides insurance to reinsurance companies will result in an after-tax gain of about C$275 million ($286.7 million), Manulife said today in a statement. The Toronto-based insurer said the reduction in annual earnings from the sale isn’t material.
“Although this business is profitable, it does not have a growth profile acceptable to us,” Manulife Chief Executive Officer Donald Guloien said today in the statement. “The transaction releases capital which will be reinvested in higher growth businesses or to reduce leverage.”
Manulife, which has been trying to bolster capital, said the sale will increase its so-called minimum continuing capital and surplus requirements ratio by about six basis points after completion. The insurer’s MCCSR ratio was 243 percent on March 31.
The retrocession business has about 90 employees in Toronto, Boston, Barbados and Cologne, Germany, Manulife said. The unit has “net life insurance in-force” of $106 billion.
Pacific Life, based in Newport Beach, California, said the transaction is expected to be completed in the third quarter. The deal will give Pacific Life about 41 percent share in the North American market for individual life retrocession, the company said in a separate statement. Pacific Life doesn’t have publicly traded shares.
Manulife fell 42 cents, or 2.6 percent, to C$15.57 at 4 p.m. in trading on the Toronto Stock Exchange. The shares have declined 9.2 percent this year, compared with an 8.5 percent drop for the six-member S&P/TSX Life & Health Insurance Index.
To contact the reporter on this story: Sean B. Pasternak in Toronto at firstname.lastname@example.org.