Bermuda-based reinsurer Fortitude Re has finalised a USD $3.8 billion long-term care (LTC) reinsurance agreement with Unum Group, a US insurance and employee benefits provider, involving a portfolio of approximately 50,000 individual insurance policies.
The transaction, completed through Fortitude Reinsurance Company Ltd. (FRL) and Unum Life Insurance Company of America (Unum America), follows an earlier agreement between the two companies in 2025.
Fortitude Re reported that the portfolio carries USD $3.8 billion in statutory reserves and approximately USD $4.5 billion in reserves calculated on a best-estimate basis.
Under the terms of the agreement, Unum initially transferred a portfolio of individual LTC policies back from Fairwind Insurance Company, its wholly owned subsidiary, before placing the business into a reinsurance arrangement with FRL.
Fortitude Re said FRL had also secured a separate retrocession agreement with a highly rated global reinsurer, transferring the entirety of the portfolio’s LTC insurance risks to that partner.
Consequently, FRL’s exposure to the reinsured business will be limited to the underlying spread-based risks, rather than the insurance risks associated with the policies.
Although the financial risks have been reallocated, Unum will retain responsibility for the ongoing administration and servicing of the affected policies.
For Unum, the agreement represents a further reduction in its legacy LTC insurance exposure as the company continues to restructure its closed block operations.
The insurer stated that its two external LTC reinsurance arrangements, completed in 2025 and 2026, have together reduced its closed block exposure through the reinsurance of more than USD $7 billion in statutory reserves.
Unum added that its remaining LTC business is now largely made up of group insurance policies, which typically offer less complex benefits than individual LTC products.
According to the company, the remaining portfolio is supported by reserve margins, while its continuing management of the business includes measures intended to reduce exposure over time.
Unum further noted that decisions by some employers to end group LTC insurance coverage have contributed to a decline in the number of policies and the associated liabilities within the portfolio.
Debevoise & Plimpton LLP provided legal advice to Unum in relation to the transaction, the insurer confirmed.
The completion marks another transaction between Fortitude Re and Unum as the latter continues to adjust its long-term care insurance portfolio through external reinsurance arrangements.
