Fortitude Re closes $3.4bn long-term care reinsurance transaction with Unum

Fortitude Re has closed a reinsurance transaction between its subsidiary, Fortitude Reinsurance Company Ltd. (FRL) and Unum Life Insurance Company of America (Unum), a subsidiary of Unum Group.

Consistent with the agreement announced earlier this year, Unum will cede to FRL, effective as of January 1, 2025, $3.4 billion of individual long-term care (LTC) statutory reserves and approximately $120 million of Unum Group’s multi-life individual disability insurance (IDI) in-force premium.

The cession reportedly represents 19% of Unum Group’s total LTC block and 20% of its in-force IDI premium. Unum will continue to service and administer the reinsured policies.

With the closing of this transaction with Unum, FRL has also agreed to retrocede 100% of the LTC and IDI insurance risks to a highly rated global reinsurance partner.

“FRL will therefore retain only the underlying spread-based risks associated with this block of business,” Fortitude Re explained.

Richard P. McKenney, president and CEO of Unum, commented, “With the close of this transaction, we have achieved a significant milestone in reducing the company’s exposure to the legacy long-term care business.

“Looking forward, we remain focused on further reducing our risk profile, delivering growth in our core businesses, optimising our capital, and delivering value for our shareholders.”

Sidley Austin LLP served as legal counsel to Fortitude Re, and Debevoise & Plimpton LLP served as legal counsel to Unum.

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