Fortitude Re expands Unum partnership with $3.8bn LTC reinsurance deal
Bermuda-based reinsurer Fortitude Re has expanded its long-term care partnership with Unum through a $3.8 billion reinsurance transaction that grows its legacy life portfolio while fully retroceding the underlying insurance risks to a third-party reinsurer.
The transaction, signed between Fortitude Re’s subsidiary Fortitude Reinsurance Company (FRL) and Unum Life Insurance Company of America, will see Unum recapture an individual long-term care (LTC) block from its wholly owned subsidiary Fairwind Insurance Company before ceding it to FRL. The block represents approximately $3.8 billion of statutory reserves, or around $4.5 billion of Unum best estimate reserves.
The agreement builds on the companies’ previous long-term care reinsurance transaction announced in 2025 and remains subject to regulatory approvals and customary closing conditions.
At the same time as the transaction closes, FRL will retrocede 100% of the LTC insurance risks to a highly rated global reinsurance partner. As a result, Fortitude Re will retain only the underlying spread-based risks associated with the portfolio.
Under the agreement, Unum will continue to service and administer the reinsured policies, including claims handling and management of premium rate increase programmes.
The portfolio comprises approximately 50,000 individual LTC policies. Following completion of the transaction, Unum expects its remaining LTC statutory reserves to total around $11 billion, with approximately 70% supporting group LTC policies, which generally have simpler benefit structures than individual policies.
For Unum, the transaction represents another step in its strategy to reduce exposure to its legacy long-term care business. Combined with the external LTC reinsurance transaction completed in 2025, the company said it will have reinsured more than $7 billion of LTC statutory reserves.
Unum expects to fund the transaction through a combination of Fairwind excess capital, holding company liquidity and financing related to future tax benefits. Following closing, it expects to maintain year-end 2026 holding company liquidity of between $1.5 billion and $2 billion, leverage of approximately 25%, and a risk-based capital ratio of between 400% and 425%.
The company said the impact on operating earnings is expected to be limited to foregone investment income and incremental interest expense associated with transaction financing.
The transaction is expected to close during 2026, subject to receipt of regulatory approvals and satisfaction or waiver of customary closing conditions.
Kai Talarek (pictured), chief growth and optimisation officer at Fortitude Re, said: “We are pleased to again partner with Unum and value the trust they have placed in our team. We also appreciate the support of our strategic partner Carlyle, whose investment expertise helps ensure we optimise the risk-adjusted return of the investments that back the promises we are making to our clients and their policyholders.”
Russell Gao, head of US origination and strategy at Fortitude Re, said: “This reinsurance agreement demonstrates how our client-centric approach drives highly customised solutions tailored to meet client needs. We thank Unum for its trust, collaboration and continued partnership.”
Richard P. McKenney, president and CEO of Unum, 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.”
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