Lincoln Financial has agreed to cede approximately US$5.8 billion in guaranteed universal life (GUL) statutory reserves to Talcott Financial Group. The transaction also includes approximately US$500 million of funding agreement liabilities. The combined total is US$6.3 billion.
The ceded reserves represent approximately 37% of Lincoln's remaining in-force GUL block. The transaction is structured partly as coinsurance with funds withheld and partly as modified coinsurance. Counterparty protections include over-collateralisation and agreed investment guidelines aligned with Lincoln's risk management framework.
Lincoln will retain account administration and claims management for the affected policies. Its obligations to policyholders and distribution partners remain unchanged. The deal is expected to close in Q4 2026, with an effective date of October 1, subject to regulatory approvals.
For Lincoln, the deal carries an all-in statutory capital impact of approximately US$200 million. The transaction will reduce the company's estimated risk-based capital (RBC) ratio by approximately 10 percentage points. Lincoln expects to remain above its 420% RBC ratio buffer target following close.
The company also projects a US$30 million to US$40 million increase in annual subsidiary remittances over the medium term. Lincoln completed a separate GUL reinsurance transaction with Fortitude Re in 2023. Together, the two deals will reinsure approximately 60% of Lincoln's total in-force GUL once this transaction closes.
GUL policies, which guarantee a minimum death benefit regardless of cash value performance, are among the more capital-intensive legacy liabilities in the US life industry.
Ellen Cooper, chairman, president, and chief executive of Lincoln Financial, said the deal extends the company's multi-year effort to improve capital quality. "Further reducing our exposure to a legacy, capital-intensive block marks another deliberate step in our multi-year strategy to fortify Lincoln's balance sheet, strengthen our financial flexibility and create long-term value for our shareholders," she said.
For Talcott, the agreement is the second between the two companies. The first was a variable annuity flow reinsurance transaction announced in 2021. Talcott manages US$134 billion in assets as of March 2026 and operates through a partnership with Sixth Street, a global investment firm.
Imran Siddiqui, Talcott's chief executive officer, said the deal extends the group's partnership with Lincoln Financial. He described it as reflecting Talcott's expanding scale and its position as a life and annuity reinsurance counterparty for institutional clients.
Lincoln's return to Talcott as counterparty reflects the importance of relationship continuity in large GUL transfers. For cedants, trust in the reinsurer's capital position and investment management capabilities is central to the risk framework.
The deal reflects a broader pattern in the US life reinsurance market. A February 2026 PwC report found that total reserves ceded by US life insurers to reinsurers reached more than US$2.4 trillion by end-2024. More than US$130 billion in liabilities were ceded in that year alone.
Wells Fargo acted as exclusive financial adviser and Skadden, Arps, Slate, Meagher & Flom served as legal adviser to Lincoln Financial. RBC Capital Markets and TD Securities (USA) served as financial advisers to Talcott, with Conyers Dill & Pearman and Debevoise & Plimpton providing legal counsel.
