MetLife announces $10 billion variable annuity risk transfer transaction

MetLife announced it has entered into an agreement with Talcott Resolution Life Insurance Company, a life insurance and annuities subsidiary of Talcott Financial Group, to reinsure approximately $10 billion of US retail variable annuity and rider reserves.

The combined value of the transaction is expected to be approximately $250 million consisting of both ceding commission and capital released over time.

The planned reinsurance transaction with Talcott is aligned with MetLife’s disciplined evaluation of risk transfer options within MetLife Holdings, the closed-block businesses of the company’s former US Retail segment. The transaction will accelerate the run-off of MetLife’s legacy business and is the latest example of executing across the company’s New Frontier strategic priorities.

MetLife anticipates that the transaction will positively reduce the company’s enterprise risk associated with capital markets. Importantly, the transaction will significantly lower the company’s retail variable annuity tail risk by reducing account values by approximately 40%.

Expected foregone annual adjusted earnings total of approximately $100 million will be offset by annual hedge cost savings of approximately $45 million.

“This transaction represents another tool in our toolkit that is available to generate long-term value. It will reduce enterprise risk and bolster MetLife’s position as a fundamental, all-weather performer. Our capacity to lower risk and successfully navigate uncertain and changing environments benefits our shareholders and all our other stakeholders.” – MetLife President and CEO Michel Khalaf.