AM Best has revised its outlook on Fortitude Re to stable from negative. The agency also affirmed the financial strength rating of A (Excellent) and the long-term issuer credit ratings of "a" (Excellent) across three subsidiaries: Fortitude Reinsurance Company Ltd., Fortitude Life Insurance & Annuity Company, and Fortitude International Reinsurance Ltd.
All three entities are domiciled in Bermuda and operate as insurance and reinsurance subsidiaries of FGH Parent, LP. They trade collectively as Fortitude Re.
The rating action arrives as Fortitude Re prepares to close a US$3.8 billion long-term care reinsurance agreement with Unum Group, announced in July 2026. AM Best said the deal is expected to put short-term pressure on excess liquidity and regulatory capital at the group's Bermuda entities. Over the longer term, the agency said the transaction should be accretive to earnings.
The group's balance sheet was assessed as very strong, with risk-adjusted capitalisation at the strongest level under the Best's Capital Adequacy Ratio (BCAR) framework. AM Best also noted Fortitude Re's long-dated investment portfolio, which includes allocations to private and alternative investments. The agency flagged a material amount of long-term liabilities on the balance sheet.
AM Best acknowledged earnings volatility from changes in asset-liability valuations and initial losses on longer-dated runoff liabilities. Performance in this area has stabilised in recent years. The agency said it expects adequate returns on capital over the longer term.
AM Best cited financial flexibility as a further support for the rating. The agency said Fortitude Re has the capacity to source additional capital when needed to support underwriting operations.
That flexibility is reflected in the group's recent financing activity. In June 2026, Fortitude Re completed a US$500 million funding agreement backed notes (FABN) offering through subsidiary Fortitude Life Insurance & Annuity Company, its second such issuance in eight months. The notes carry a 5.50% coupon, mature in June 2031 and are rated A- by Fitch Ratings and A3 by Moody's.
In its business profile assessment, AM Best noted Fortitude Re's experienced management team and its work diversifying liabilities through flow reinsurance agreements. The group holds more than US$100 billion in reserves. Its backers include private equity firm Carlyle and Japan-based T&D Insurance Group.
AM Best said it will continue to monitor Fortitude Re's progress as it executes transactions and adds to its portfolio.
Alan Stewart, managing director and group treasurer at Fortitude Re, said the outcome reflected the group's approach to capital management. "We remain focused on maintaining balance sheet strength at the highest level while thoughtfully growing and diversifying our business, and we are confident this supports the trajectory AM Best has recognised," he said.
Stewart described the affirmed rating and revised outlook as "meaningful markers of the progress we have made in the consistent execution of our strategy and effective capital management."
The rating action comes against a broader shift in the life and annuity reinsurance segment. An April 2026 AM Best special report found that annuity reserves now account for more than 36% of total US life/annuity industry reserves, up from 32% before the 2008 financial crisis. A growing share of those reserves is held by companies that carry lower credit ratings than they did in 2007, partly driven by the expansion of PE-backed offshore reinsurance platforms.
