MetLife, Inc., a leading global insurance provider, has recently announced a significant agreement with Global Atlantic Financial Group, a prominent retirement and life insurance company. The deal involves the reinsurance of approximately $19.2 billion in U.S. retail universal life, variable universal life, universal life with secondary guarantees, and fixed annuity statutory reserves.
The transaction's total value is estimated to be around $3.25 billion, which includes a ceding commission of $2.25 billion and released capital of $1 billion. In addition to this reinsurance agreement, the MetLife Board of Directors has decided to increase the company's share repurchase authorization by an additional $1 billion.
This increase follows the previously announced $3 billion authorization in May 2023, bringing the total share repurchase authorization to approximately $4 billion.
This strategic move by MetLife is in line with its disciplined approach to evaluating risk transfer options within its closed-block businesses under MetLife Holdings, the former U.S. retail segment. The transaction will expedite the run-off of MetLife's legacy business and represents a significant milestone in the company's execution of its Next Horizon strategic pillars, which focus on prioritizing, simplifying, and differentiating its operations.
MetLife anticipates several positive outcomes from this reinsurance transaction. It is expected to have a favorable impact on key financial metrics, including contributing to the company's targeted adjusted return on equity of 13% to 15% and boosting its adjusted earnings per diluted share.
According to Michel Khalaf, President and Chief Executive Officer of MetLife, this transaction marks an important step in creating long-term value for their shareholders and stakeholders.
It will reduce enterprise risk and enable continued investment in responsible growth while returning capital to shareholders. Khalaf further emphasizes that this move showcases MetLife's financial strength and balanced capital management.
As a provider of insurance, annuities, and employee benefit programs, MetLife serves over 90 million customers worldwide. The company's commitment to delivering trusted financial solutions and helping individuals and businesses navigate through life's uncertainties has solidified its position as a leader in the insurance industry.
On the other hand, Global Atlantic Financial Group is a retirement and life insurance company known for its expertise in providing innovative and customized solutions to its customers. With a strong focus on retirement and life insurance products, Global Atlantic has established a reputation for delivering exceptional service and financial security to its policyholders.
The partnership between MetLife and Global Atlantic will allow both companies to leverage their strengths and enhance their respective positions in the insurance industry.
This collaboration will enable MetLife to transfer risk and optimize its closed-block businesses, ultimately creating value for its shareholders. Meanwhile, Global Atlantic will gain access to a substantial portfolio of insurance reserves, further strengthening its capabilities in the retirement and life insurance sectors. As both companies continue to focus on their respective growth strategies, this partnership sets the stage for future success in the dynamic insurance industry.