Reinsurance News

Fortitude Re closes $28bn reinsurance agreement with Lincoln Financial

21st November 2023 - Author: Kassandra Jimenez-Sanchez

Global multi-line reinsurer Fortitude Re has announced the closing of its $28 billion reinsurance agreement with The Lincoln National Life Insurance Company, a subsidiary of Lincoln National Corporation.

handshake-close-up-photoThis is consistent with the agreement announced in early May this year. It was stated that Lincoln will reinsure a significant portion of its universal life insurance and fixed annuity business to Fortitude Re.

Lincoln received regulatory approval for this reinsurance transaction in early November.

The risk transfer transaction encompasses 40% of Lincoln’s universal life with secondary guarantees (ULSG) in-force, in addition to MoneyGuard® and fixed annuities.

According to Lincoln, the reinsured block is comprised of roughly $9 billion of ULSG statutory reserves, or about 40% of Lincoln’s total in-force ULSG, nearly $12 billion of MoneyGuard statutory reserves, or about 80% of Lincoln’s total in-force MoneyGuard, and almost $8 billion of fixed annuities statutory reserves, or about 40% of Lincoln’s total in-force fixed annuities.

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Under the terms of the agreement, Lincoln will continue to service and administer the reinsured policies to ensure a consistent experience for customers, the firm noted.

Brian Schreiber, Chairman of the Fortitude Re Board of Directors, had previously commented: “This agreement is a great example of how Fortitude Re leverages its strong balance sheet, asset origination capabilities and deep insurance expertise to deliver value-enhancing solutions to our clients.”

For Lincoln, it’s expected that the transaction will reduce its exposure to life insurance in-force long-term assumption risk and lower invested asset leverage.

At the same time, the firm expects the agreement to improve its risk-based capital ratio by approximately 15 points at closing, and increase annual free cash flow by more than $100 million.

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