Under the agreement, Unum will cede $3.4 billion of individual long-term care (LTC) statutory reserves and approximately $120 million of multi-life individual disability insurance (IDI) in-force premium to Fortitude Re’s subsidiary.
The transaction involves the cession of 19% of Unum’s total LTC block and 20% of its in-force IDI premium. Unum will continue to service and administer the reinsured policies.
Fortitude Re will simultaneously enter into a retrocession agreement with a highly rated global reinsurance partner, retroceding 100% of the LTC and IDI insurance risks.
“Fortitude Reinsurance Company will therefore retain only the underlying spread-based risks associated with this block of business,” Fortitude Re said.
Alon Neches, CEO, Fortitude Re, commented, “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 honors that trust. I would like to extend a special thank you to the many professionals who have collaborated and worked tirelessly to achieve this important milestone.”
Richard P. McKenney, president and CEO of Unum Group, said, “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. We remain committed to our closed block strategy, pursuing opportunities to optimize our capital, and delivering value for our shareholders.”
