March 25 (Reuters) - Manulife Financial ( MFC ) said on

Monday it has agreed to reinsure C$5.8 billion ($4.27 billion)

of reserves of Canadian Universal Life block, as the country's

top insurer looks to de-risk its business and improve

shareholder returns.

The deal with RGA Life Reinsurance Company of Canada is

expected to generate C$800 million of capital, which Manulife

intends to use for share buybacks, it said.

"With this transaction, we will have released C$11 billion

of capital since 2018 and improved core return on equity (ROE)

by about 5% since 2017," Manulife CEO Roy Gori said in a

statement.

The company has been seeking to cut risk in its insurance

portfolio and focus on profitable areas for growth.

In December, Manulife signed a C$13 billion deal to reinsure

its long-term care business reserves.

"We remain highly focused on exploring additional organic

and inorganic actions to deliver value to shareholders," Gori

added.

A contract between a reinsurer and an insurer typically

reduces the risk for the latter, allowing it to remain solvent

by recovering a part of the payout.

RGA is a global reinsurance company and is an existing

reinsurance partner of Manulife. The transaction marks the third

large reinsurance transaction between the two companies, it

said.

With the latest RGA deal, Manulife also expects to sell

C$600 million in alternative long-duration assets (ALDA) that it

had invested in to back the Canadian Universal Life block.

Shares of Manulife are up roughly 11.5% this year, compared

with an about 7.4% gain in closest rival Sun Life's

stock.

($1 = 1.3582 Canadian dollars)

(Reporting by Manya Saini in Bengaluru; Editing by Shilpi

Majumdar and Shinjini Ganguli)