Unum Life Insurance Company of America has reached an agreement with Fortitude Re to cede a 19% portion of its long-term care (LTC) policies and a 20% quota share in individual disability insurance (IDI) policies.
Upon deal closure, Unum America will transfer $3.4bn of individual LTC reserves and approximately $120m of IDI in-force premium to Fortitude Re.
Subsequently, Fortitude Re will retrocede biometric risk to a “global reinsurer”.
The IDI segment of the deal involves business reinsured from Provident Life and Accident Insurance Company, an affiliate of Unum, and excludes any new business.
The estimated capital benefit from the overall transaction is projected to be around $100m, resulting from a $200m “capital impact” from the reinsured LTC block and a $300m “capital benefit” from the reinsured IDI block.
Unum will retain its role in servicing and administering the reinsured business.
The completion of this deal is expected in 2025, contingent on regulatory clearances and other standard closing conditions.
Debevoise & Plimpton offered legal advice to Unum, while Sidley Austin represented Fortitude Re.
Unum President and CEO Richard P. McKenney “The transaction announced today with Fortitude Re is consistent with our strategy of growing a leading employee benefits business while reducing our exposure to the legacy long-term care business. Through this action we further improve our risk profile, decrease the footprint of the closed block and shift focus towards our more capital efficient, higher-returning core businesses. The transaction also validates our assumptions for the LTC block, and the actions we have taken over the last several years.”
Fortitude Re CEO Alon Neches said: “Today’s announcement underscores the deliberate approach we have taken toward growth. When partners like Unum place their trust in us, we ensure the value delivered honours that trust.”
In July last year, Unum Group reached a definitive agreement to sell its medical stop loss business to Amynta Group.
"Unum America to cede LTC and IDI policies to Fortitude Re " was originally created and published by Life Insurance International, a GlobalData owned brand.
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