12:46 PM EDT, 03/26/2024 (MT Newswires) -- Manulife Financial ( MFC ) announced a deal to reinsure parts of its low ROE Canadian universal life block, which will free up $800 million of capital, allowing the lifeco to increase share buybacks, notes RBC. The transaction is expected to close in early Q2/24 and is not subject to closing conditions.

RBC says it has a "moderately positive" view on the transaction as it will be mildly accretive to MFC's core ROE and core EPS, despite the $50 million reduction in annual core earnings.

This transaction, in addition to its recent LTC reinsurance deal suggests good appetite from reinsurers, notes analyst Darko Mihelic. "We view this as a positive as we believe that it may mean we could see MFC enter into additional U.S. LTC reinsurance deal(s) in the future."

Maintain Outperform, $38 target.

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