MetLife Finalizes $10B Variable Annuity Risk Transfer Deal with Talcott

MetLife has completed a significant $10 billion variable annuity risk transfer transaction with Talcott Resolution Life Insurance Company, a subsidiary of Talcott Financial Group specializing in annuities and life insurance. This deal involves Talcott reinsuring approximately $10 billion in variable annuity and rider reserves, transferring substantial portfolio risk away from MetLife while MetLife retains responsibility for policy administration and servicing. The reinsurance arrangement uses a structure combining modified coinsurance and funds withheld techniques, a strategy aimed at risk mitigation for MetLife's legacy annuity business. Financially, MetLife expects to forfeit about $100 million in annual adjusted earnings due to the transaction. However, this loss is partially offset by anticipated annual hedge cost savings of around $45 million. This risk transfer supports MetLife's broader strategy to reduce exposure in its legacy portfolio, particularly within MetLife Holdings, which houses closed-block operations from the former US Retail segment. Under agreements associated with the transaction, MetLife Investment Management will oversee approximately $6 billion in assets, managing investments aligned with Talcott's reinsurance of these liabilities. The $10 billion transaction with Talcott adds to a cumulative $14 billion in reserves reinsured by Talcott in 2025, underscoring an active year of risk transfer initiatives for the reinsurer. Earlier in 2023, MetLife entered the Bermuda market with Chariot Reinsurance, a new Class E life and annuity reinsurance practice formed in partnership with General Atlantic. Chariot Re assumed about $10 billion in liabilities from MetLife subsidiary portfolios, including structured settlement annuities and group annuities linked to pension risk transfers. This highlights MetLife’s expanded risk transfer and reinsurance activities across multiple platforms. Additionally, MetLife appointed Adrienne O’Neill as the new executive vice-president and chief accounting officer, a role that includes oversight of corporate accounting, financial reporting, and financial planning. This leadership change aligns with MetLife’s focus on managing accounting functions as it implements its risk transfer strategies. MetLife's recent transactions with Talcott and Chariot Re reflect a strategic approach to risk management that involves divesting certain liability exposures while maintaining operational control of the policies. Such risk transfer mechanisms influence the company’s balance sheet, earnings profile, and investment management responsibilities, positioning MetLife for adaptive management of closed-block annuity risks.