Fortitude Reinsurance Company Ltd. has closed a $3.8 billion long-term care (LTC) reinsurance transaction with Unum Group, completing the second major block deal between the two companies in little more than 16 months and cutting Unum’s total LTC statutory reserves by approximately 40% from the start of 2025.
The agreement covers around 50,000 individual LTC policies, representing $3.8 billion in statutory reserves and approximately $4.5 billion on a best-estimate basis, according to Unum’s July 2026 disclosure. Unum retains policy administration and servicing throughout. Combined with a $3.4 billion deal announced in February 2025, the two transactions have reduced Unum’s closed LTC block by more than $7 billion, bringing total remaining LTC statutory reserves to approximately $11 billion, with roughly 70% of that now backed by group policies rather than individual ones.
Fortitude Re is simultaneously retroceding 100% of the LTC insurance risks to an unnamed “highly rated global reinsurer,” retaining only the underlying spread-based risks. It is the same architecture used in the first Unum-Fortitude deal, as well as in Global Atlantic’s reinsurance of a large Manulife LTC block, a pattern that signals where actual LTC risk appetite in the market sits. Capital willing to absorb biometric LTC risk exists, but it remains narrow and operates behind anonymous intermediaries rather than through the headline reinsurers.
For Unum, the deal advances what the company calls its “Closed Block” strategy. CEO Richard McKenney said during the July 6 analyst call that the transaction “will cost us $650 million of holding company excess capital, which is well balanced with the derisking that we achieved.” The company expects to close 2026 with holding company liquidity of $1.5 billion to $2 billion and risk-based capital between 400% and 425%.
Unum stopped writing individual LTC in 2009 and group LTC in 2012, but the runoff block has weighed on its capital allocation and balance sheet ever since. Each dollar of LTC reserves shed through reinsurance frees capital that Unum has stated it intends to direct toward its disability, life, accident, and voluntary products businesses, where it competes directly with carriers for employer and broker relationships.
CFO Steve Zabel noted that average daily benefits on group LTC run at roughly one-third of individual, 77% of group policies have no inflation protection, and only 7% carry lifetime benefits. Those characteristics make the block easier to price and potentially more attractive to reinsurers.
McKenney confirmed on the analyst call that Unum remains focused on its US, UK, and Poland employee benefits franchises as the closed block continues to shrink. Analysts pressed McKenney during the July call on whether the group LTC block might be next for external reinsurance, though no commitment was made. The group LTC block carries a structurally different risk profile than individual.
Fortitude Re’s outlook was revised to stable by AM Best ahead of this closing, with the agency affirming the reinsurer’s A (Excellent) financial strength rating while flagging near-term liquidity pressure from absorbing the block. The rating action acknowledged Fortitude’s experienced management and its growing track record of diversifying liabilities, including the $3.4 billion deal it first struck with Unum in early 2025, before this second and larger agreement.
Sidley Austin served as legal counsel to Fortitude Re.
