Fortitude Re to Assume $3.8 Billion of Unum Group Long-Term Care Liabilities
UNM•Fortitude Re will assume $3.8 billion in long-term care reserves from Unum Group under a coinsurance agreement to transfer future policy liabilities. The deal is designed to bolster Unum’s capital position and mitigate volatility in its long-term care insurance portfolio.
1. Transaction Overview
Fortitude Re and Unum Group signed a long-term care reinsurance coinsurance agreement under which Fortitude Re will assume $3.8 billion of Unum’s LTC reserves. The agreement transfers future policy liabilities in exchange for a reinsurance premium structured over the life of the block.
2. Strategic Rationale
Unum Group aims to reduce its exposure to long-term care claim volatility and strengthen its risk-based capital metrics through the transaction. The company plans to redirect the freed-up capital toward core business initiatives and shareholder returns.
3. Financial Implications
Unum expects an improvement in its surplus and a reduction in reserve variability while recognizing a one-time reinsurance charge impacting pretax income. The transaction is projected to meaningfully enhance Unum’s balance sheet flexibility and risk profile.
