Global reinsurer Fortitude Re has signed a $3.8 billion long-term care (LTC) reinsurance transaction between its subsidiary, Fortitude Reinsurance Company Ltd. (FRL) and Unum Life Insurance Company of America (Unum), a subsidiary of Unum Group.
Upon receipt of regulatory approvals and subject to satisfaction or waiver of certain other customary closing conditions, Unum will recapture an individual LTC block from its wholly-owned subsidiary, Fairwind Insurance Company.
The reinsured block consists of approximately 50,000 individual LTC policies with $3.8 billion of statutory reserves and approximately $4.5 billion of best estimate reserves.
According to the announcement, Unum will continue to service and administer the reinsured business, including claims handling and premium rate increase program management.
Following the transaction, Unum’s remaining LTC statutory reserves are expected to be approximately $11 billion, with approximately 70% of remaining reserves backing 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 Block strategy to further reduce our exposure to our legacy long-term care business and maintain our focus on Unum’s leading employee benefits franchise.
“Building on the actions we have taken over the last several years, including our prior external reinsurance transactions, this agreement significantly reduces the size and risk profile of the Closed Block. With a strong capital position and a clear strategic focus, we remain committed to disciplined execution, prudent capital management, and delivering long-term value for shareholders.”
This deal follows Unum’s 2025 LTC reinsurance agreement and marks a further advancement in the company’s closed block strategy. Combined, these two external deals will have reduced the company’s closed block presence by reinsuring over $7 billion in LTC statutory reserves.
Funding for the transaction will come from Fairwind excess capital, holding company liquidity, and future tax benefit financing.
Following the closing of the transaction, Unum anticipates a strong capital position, targeting year-end 2026 liquidity of $1.5 billion to $2.0 billion, approximately 25% leverage, and an RBC ratio between 400% and 425%.
The impact on operating earnings is expected to be limited to transaction-related interest expenses and foregone investment income.
