Unum Group announced a significant reinsurance transaction where its subsidiary, Unum Life Insurance Company of America, will cede individual long-term care (LTC) insurance policies to Fortitude Reinsurance Company Ltd. This agreement covers 19 percent of Unum's total LTC block and a quota share of individual disability insurance (IDI) policies representing 20 percent of Unum's total in-force IDI premium. The transaction is effective January 1, 2025.
The agreement involves ceding $3.4 billion of individual LTC reserves and approximately $120 million of IDI in-force premium. This strategic move is expected to generate an estimated $100 million capital benefit for Unum Group. Fortitude Re will subsequently retrocede the biometric risk to a highly rated global reinsurer, while Unum will continue to provide service and administration for the reinsured business.
Richard P. McKenney, president and chief executive officer, stated that this transaction aligns with Unum's strategy of growing its employee benefits business while reducing exposure to legacy LTC. The deal is expected to improve the company's risk profile, decrease the footprint of the closed block, and shift focus towards more capital-efficient core businesses. The transaction is subject to regulatory approvals and is expected to close during 2025.
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