Unum Group’s Reinsurance Agreement
Unum Group is set to 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 Reinsurance Company. The cession to Fortitude Re’s subsidiary reportedly represents 19% of Unum’s total LTC block and 20% of its in-force IDI premium. Fortitude Re stated that Unum will continue to service and administer the reinsured policies.
Retrocession Agreement
Concurrently with the closing of the reinsurance transaction with Unum, Fortitude Reinsurance Company will enter into an agreement to retrocede 100% of the LTC and IDI insurance risks to a highly rated global reinsurance partner. “Fortitude Reinsurance Company will therefore retain only the underlying spread-based risks associated with this block of business,” Fortitude Re said.
Comments from Fortitude Re and Unum
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.”
