Reuters: Private Equity: UPDATE 1-Reinsurance Group enters annuities deal with John Hancock Life

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UPDATE 1-Reinsurance Group enters annuities deal with John Hancock Life Jul 2nd 2012, 11:37 July 2 | Mon Jul 2, 2012 7:37am EDT July 2 (Reuters) - Reinsurance Group of America Inc said its unit has agreed to reinsure 90 percent of a block of John Hancock Life Insurance Co's fixed deferred annuity business, for an initial premium of $5.4 billion in invested assets. A fixed deferred annuity allows customers to earn a fixed rate of interest while deferring income tax. But as interest rates have fallen to historical lows, the products have started to weigh on insurer earnings. The initial premium will consist mainly of investment grade fixed income securities and commercial mortgage loans, Reinsurance Group said in a filing with the U.S. Securities and Exchange Commission. Reinsurance Group's RGA Re unit will reinsure John Hancock for 90 percent of death benefits, withdrawals, surrenders and other benefits related to the annuities covered by the deal. The company, which plans to invest about $350 million of capital from existing resources, expects the deal to immediately boost its earnings per share, starting from the quarter ending June 30. The reinsurance deal, which is on an indemnity basis, is expected to be completed by the end of this month. Shares of Reinsurance Group closed at $53.21 on Friday on the New York Stock Exchange.

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