Unum has transferred $3.4 billion of its insurance reserves to Fortitude Re under a new reinsurance partnership.
The transaction, which took effect this year, will see Fortitude Re assume responsibility for 19% of Unum's long-term care reserves and 20% of its individual disability insurance business.
The deal brought together Fortitude Reinsurance Company Ltd., a subsidiary of Fortitude Re, and Unum Life Insurance Company of America, which operates under the Unum Group umbrella.
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Once regulators give the green light, Fortitude Re will take on billions of statutory reserves under Unum's individual long-term care portfolio.
The agreement encompasses almost a fifth of Unum Group's LTC business and a similar proportion of its disability insurance premium base pegged at approximately $120 million.
While the financial responsibility transfers to Fortitude Re, policyholder experience will remain unchanged as Unum maintains its administrative functions for the transferred policies.
In a parallel arrangement, Fortitude Re plans to distribute the insurance risk through a retrocession agreement with a top-tier global reinsurer, focusing its own retention on spread-based risks within the portfolio.
"Today's announcement underscores the deliberate approach we have taken toward growth," said Fortitude Re CEO Alon Neches. "When partners like Unum place their trust in us, we ensure the value delivered honours that trust."
Neches acknowledged the collaborative effort behind the deal, which strengthens Fortitude Re's standing in the global reinsurance market.
Sidley Austin LLP provided legal guidance to Fortitude Re throughout the transaction process.
The deal adds to Fortitude Re's portfolio of reinsurance transactions with major insurance providers.
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