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Great-West Lifeco Inc. (GWL) will issue $1.5 billion in limited recourse capital notes (LRCNs) with a fixed interest rate of 3.6% annually.

After Dec. 31, 2026, the interest rate will reset every five years at the five-year Government of Canada yield plus 2.641%, the Winnipeg-based firm said in a release on Tuesday. The notes mature on Dec. 31, 2081.

In March, the Office of the Superintendent of Financial Institutions (OSFI) began allowing LRCNs to qualify as Tier 1 capital other than common shares for life insurance companies.

The rules are an expansion of changes OSFI introduced last summer when the regulator started allowing banks to recognize LRCNs as additional Tier 1 capital. Canadian banks responded by issuing $5.7 billion in LRCNs last year, according to DBRS Morningstar, which predicted insurers would follow this year.

Empire Life Insurance Co., Manulife Financial Corp. and Sun Life Financial Inc. have already issued LRCNs.

The notes have two components: the interest-bearing instrument with a 60-year term that’s issued directly to investors, and the perpetual, non-cumulative preferred shares issued to a special-purpose vehicle to be held in trust for the benefit of the note holders.

The notes can only be issued to institutional investors.

GWL’s offering is expected to close on Aug. 16.