Unum Group has agreed to cede US$3.8 billion of individual long-term care (LTC) statutory reserves to Fortitude Re on a coinsurance basis. The transaction represents 26% of Unum's total LTC reserves and 52% of its individual LTC reserves as of March 31, 2026.
Unum Life Insurance Company of America will recapture the reinsured block from Fairwind, a wholly-owned subsidiary, and cede it to Fortitude Re at closing. Fortitude Re will simultaneously retrocede 100% of the biometric risk to a highly rated global reinsurer. The Bermuda-based company will thereby retain only the spread-based investment risks associated with the reinsured liabilities.
The reinsured block comprises approximately 50,000 individual LTC policies with US$3.8 billion of statutory reserves and approximately US$4.5 billion of best estimate reserves. Unum will retain administration of the reinsured business, including claims handling and premium rate increase programme management. Unum's remaining LTC statutory reserves are expected to be approximately US$11 billion once the deal closes.
The transaction is the second external LTC reinsurance agreement between Unum and Fortitude Re. The first deal, effective January 1, 2025, covered US$3.4 billion of individual LTC statutory reserves and US$120 million of multi-life individual disability insurance premium. That transaction represented 19% of Unum's LTC block and used the same retrocession structure to cede 100% of insurance risks to a global reinsurer.
Together, the two transactions will have reduced Unum's LTC statutory reserves through reinsurance by more than US$7 billion, a cumulative decrease of approximately 40%. Group LTC policies are expected to account for about 70% of remaining reserves and generally have more basic benefit structures than individual LTC policies.
Long-term care liabilities have been a persistent source of reserve uncertainty for US life insurers. Many legacy LTC blocks face pressure from historically underpriced premiums and higher-than-expected claims experience. Transferring individual LTC blocks has become a priority for major carriers seeking to reduce balance sheet exposure and free up capital for core businesses.
Richard P. McKenney, president and chief executive of Unum Group, said the transaction "significantly reduces the size and risk profile of the Closed Block." McKenney said the agreement also builds on prior external reinsurance transactions to reduce the company's LTC exposure and maintain focus on its employee benefits franchise.
The deal will be funded through Fairwind excess capital, holding company liquidity and financing linked to future tax benefits. The impact on operating earnings is expected to be limited to foregone investment income and incremental interest expense from transaction financing. Unum expects year-end 2026 holding company liquidity of US$1.5 billion to $2 billion, leverage of approximately 25% and risk-based capital of 400% to 425%.
Global life reinsurance reserves reached a record US$1.4 trillion in 2024, a 15% rise year-on-year, per Aon's Reinsurance Solutions data. Asset-intensive Bermuda transactions accounted for the majority of that growth and have drawn regulatory attention, including the NAIC's Actuarial Guideline 55, approved in August 2025.
Fortitude Re is a Bermuda-based legacy insurance specialist backed by Carlyle Group, with $106 billion in total assets under management as of December 2024. Asset manager-backed reinsurers in the LTC market have adopted this structure to concentrate their expertise on investment management rather than biometric risk. The transaction is expected to close during 2026, subject to regulatory approvals, and Sidley Austin LLP acted as legal counsel to Fortitude Re.
