Lincoln Financial Group has entered into an agreement with Talcott Resolution Life Insurance Company to reinsure up to $1.5 billion in sales of Lincoln’s variable annuity living benefit rider.
The transaction covers business issued from April 1, 2021, through June 30, 2022, and will see Lincoln Financial retain account administration and recordkeeping of the annuity policies.
Under the terms of the deal, Lincoln Financial will cede $1.5 billion of living benefit riders but retain 100% of the base contract cash flows.
The transaction is dated September 17, 2021 and is structured as a coinsurance treaty with a comfort trust to mitigate counterparty credit risk.
“Recent industry transactions reflect an active reinsurance market with attractive pricing, and we are extremely pleased to announce this flow reinsurance agreement on the heels of the life block transaction that we announced last week,” said Dennis R. Glass, president and CEO of Lincoln Financial Group.
“This transaction is another example of how we employ creative solutions, such as block and flow deals across our businesses, to maximize value for our shareholders.”
Ellen Cooper, Executive Vice President, Chief Investment Officer, Head of Enterprise Risk and Annuity Solutions of Lincoln Financial Group, also commented: “We are excited to enter into this relationship with Talcott and will continue to explore opportunities to build on this partnership.”
“This transaction is in line with our strategy to continue to grow the variable annuity business while maintaining a good mix of sales with and without long-term guarantees. The terms of the reinsurance transaction match our rigorous new business pricing while enhancing the return on the business retained.”