Manulife Financial Corp. struck another deal to offload some of its less-profitable assets, agreeing to reinsure $5.8 billion of Canadian policies with RGA Life Reinsurance Co. of Canada.

The deal will allow the Toronto-based insurer and asset manager to release $800 million in capital, which it plans to return to shareholders through share buybacks, according to a statement Monday. Manulife will continue to administer the policies, which are a block of Canadian universal life-insurance policies with a low return on equity.

“This transaction is the largest universal life reinsurance transaction in the Canadian insurance industry and represents another milestone in our journey to transform our portfolio to higher-ROE and lower-risk businesses,” Manulife Chief Executive Officer Roy Gori said in the statement.

Manulife shares rose 1.2 per cent to $33.06 at 3:19 p.m. They’ve gained 13 per cent this year, compared with a 3.5 per cent increase for the S&P/TSX Composite Financials Sector Index.

The deal comes three months after Manulife announced what it called at the time the largest long-term care reinsurance transaction in the industry’s history, reinsuring $13 billion of reserves with KKR & Co.’s Global Atlantic Financial Group and its partners.

Such deals result in lower core earnings, as the insurer no longer books revenue from the policies. But offloading assets with a low return on equity improves the company’s overall profitability and means it doesn’t have to hold as much capital under regulatory rules.

Manulife and RGA, a subsidiary of Chesterfield, Missouri-based Reinsurance Group of America Inc., have completed two previous transactions together. Manulife said the latest deal, scheduled for completion early in the second quarter, will add 1 Canadian cent to its core earnings per share on an annualized basis after accounting for the share buybacks.

The type of policies involved in the deal are “very long-term and provide guaranteed pricing for the policyholder,” TD Securities analyst Mario Mendonca said in a note to clients Monday. “For these results, we view this block as a particularly important block to reinsure.”

For RGA, the deal works because the company manages its balance sheet under different rules than Manulife does, according to Marc Costantini, global head of inforce management at the Canadian insurer. RGA has “different internal targets, a different internal management approach and different assets backing the liability,” he said in an interview.

The insurance sector has seen an increase in such deals recently among both publicly traded companies and private equity firms. Manulife is “very selective” in choosing its partners, Chief Financial Officer Colin Simpson said.

“We would only choose to transact with reinsurers who we believe have appropriate levels of capitalization ability to meet their obligations,” he said. “Not all private equity-backed reinsurers are created the same.”