Global reinsurer Fortitude Re has signed a $3.8 billion long-term care (LTC) reinsurance deal between its subsidiary Fortitude Reinsurance Company Ltd. (FRL) and Unum Life Insurance Company of America (Unum), a subsidiary of Unum Group.
Subject to regulatory approval and the satisfaction or waiver of certain other customary closing conditions, Unum will reclaim a single LTC block from its wholly-owned subsidiary Fairwind Insurance Company.
The reinsurance segment consists of approximately 50,000 individual long-term care policies, with statutory reserves of $3.8 billion and best estimate reserves of approximately $4.5 billion.
According to the announcement, Unum will continue to service and manage the reinsurance business, including claims processing and premium escalation program administration.
Upon completion of the transaction, Unum’s remaining LTC statutory reserves are expected to be approximately $11 billion, with approximately 70% of remaining reserves supporting group LTC policies, which generally have more basic benefit structures than individual LTC policies.
Richard P. McKenney, president and chief executive officer, said: “This marks another important step in advancing our closed territory strategy to further reduce our exposure to our traditional long-term care business and maintain our focus on Unum’s leading employee benefits franchise.
“Building on the actions we have taken over the past several years, including our previous external reinsurance transactions, this agreement significantly reduces the size and risk profile of the closed block. With a strong capital position and clear strategic focus, we remain committed to disciplined execution, prudent capital management and long-term value creation for shareholders.”
The deal follows Unum’s 2025 LTC reinsurance agreement and marks a further advancement of the company’s closed block strategy. Combined, these two external transactions will reduce the company’s closed block presence by reinsurance of over $7 billion in LTC statutory reserves.
The transaction will be funded by Fairwind’s excess capital, holding company liquidity and future tax-advantaged financing.
Following the transaction, Unum expects to have a strong capital position, targeting liquidity of $1.5 billion to $2.0 billion by the end of 2026, with leverage of approximately 25% and an RBC ratio of between 400% and 425%.
The impact on operating profit is expected to be limited to transaction-related interest expense and foregone investment income.
