Nov 20 (Reuters) - Canada's Manulife Financial ( MFC )

will reinsure C$5.4 billion ($3.86 billion) of its reserves as

it looks to transfer some risk from its portfolio and free up

capital for stock buybacks.

The agreement with Reinsurance Group of America ( RGA )

covers C$2.4 billion of long-term care reserves, Manulife said

on Wednesday.

Long-term care insurance is considered a high-risk business

as it involves coverage for people with chronic or disabling

conditions who need constant care, typically found in

individuals over 65.

Insurers maintain reserves to pay out claims by

policyholders. By reinsuring those reserves, they can transfer

some of those obligations and unlock capital to underwrite

additional policies or return capital to shareholders.

Manulife said the latest deal will free up C$800 million of

capital for buybacks.

Earlier this year, it had clinched a reinsurance deal with

RGA Life Reinsurance Company of Canada for C$5.8 billion of

reserves.

($1 = C$1.3976)