Unum Group Announces $3.4 Billion Long-Term Care Reinsurance Transaction with Fortitude Re
Unum Group (NYSE: UNM) has announced a significant reinsurance transaction with Fortitude Re, effective January 1, 2025. The agreement involves ceding $3.4 billion of statutory long-term care (LTC) reserves, representing 19% of total LTC statutory reserves, to Fortitude Reinsurance Company
The deal also includes a quota share of individual disability insurance (IDI) policies, comprising 20% of Unum's total in-force IDI premium (approximately $120 million). Fortitude Re will retrocede biometric risk to a highly rated global reinsurer.
The transaction is expected to generate a $100 million capital benefit, consisting of a $200 million capital impact from the LTC block and a $300 million benefit from the IDI block. Unum will maintain service and administration for the reinsured business. The closing is anticipated during 2025, subject to regulatory approvals and customary conditions.
Unum Group (NYSE: UNM) ha annunciato una significativa operazione di riassicurazione con Fortitude Re, efficace dal 1 gennaio 2025. L'accordo prevede la cessione di 3,4 miliardi di dollari di riserve legali per la cura a lungo termine (LTC), che rappresentano il 19% delle riserve legali totali per LTC, alla Fortitude Reinsurance Company.
Il contratto include anche una quota di partecipazione delle polizze di assicurazione contro la disabilità individuale (IDI), che comprende il 20% del totale dei premi in vigore di IDI di Unum (circa 120 milioni di dollari). Fortitude Re retrocederà il rischio biometrico a un riassicuratore globale altamente valutato.
Si prevede che la transazione genererà un beneficio di capitale di 100 milioni di dollari, composto da un impatto di capitale di 200 milioni di dollari dal blocco LTC e un beneficio di 300 milioni di dollari dal blocco IDI. Unum manterrà il servizio e l'amministrazione per l'attività riassicurata. La chiusura è prevista per il 2025, soggetta ad approvazioni normative e condizioni consuete.
Unum Group (NYSE: UNM) ha anunciado una transacción significativa de reaseguro con Fortitude Re, efectiva a partir del 1 de enero de 2025. El acuerdo implica la cesión de 3.4 mil millones de dólares en reservas estatutarias para cuidados a largo plazo (LTC), lo que representa el 19% del total de reservas estatutarias para LTC, a Fortitude Reinsurance Company.
El acuerdo también incluye una participación en las pólizas de seguro de discapacidad individual (IDI), que comprende el 20% del total de la prima en vigor de IDI de Unum (aproximadamente 120 millones de dólares). Fortitude Re retrocederá el riesgo biométrico a un reasegurador global altamente calificado.
Se espera que la transacción genere un beneficio de capital de 100 millones de dólares, que consiste en un impacto de capital de 200 millones de dólares del bloque LTC y un beneficio de 300 millones de dólares del bloque IDI. Unum mantendrá el servicio y la administración del negocio reasegurado. Se anticipa que el cierre ocurra durante 2025, sujeto a aprobaciones regulatorias y condiciones habituales.
Unum Group (NYSE: UNM)는 2025년 1월 1일부터 유효한 Fortitude Re와의 중요한 재보험 거래를 발표했습니다. 이 계약은 Fortitude Reinsurance Company에 34억 달러의 법정 장기 요양(LTC) 준비금을 양도하는 것으로, 이는 총 LTC 법정 준비금의 19%에 해당합니다.
이번 거래에는 Unum의 총 유효 IDI 프리미엄의 20%에 해당하는 개별 장애 보험(IDI) 정책의 할당도 포함되어 있으며(약 1억 2천만 달러), Fortitude Re는 생체 위험을 높은 평가를 받은 글로벌 재보험사에 재보험합니다.
이번 거래는 1억 달러의 자본 혜택을 생성할 것으로 예상되며, LTC 블록에서 2억 달러의 자본 영향과 IDI 블록에서 3억 달러의 혜택으로 구성됩니다. Unum은 재보험된 사업에 대한 서비스 및 관리를 유지할 것입니다. 거래 마감은 2025년으로 예상되며, 규제 승인 및 일반 조건에 따라 달라질 수 있습니다.
Unum Group (NYSE: UNM) a annoncé une transaction de réassurance significative avec Fortitude Re, effective à partir du 1er janvier 2025. L'accord implique la cession de 3,4 milliards de dollars de réserves légales pour les soins à long terme (LTC), représentant 19 % des réserves légales totales pour LTC, à la Fortitude Reinsurance Company.
Le contrat comprend également une part des polices d'assurance invalidité individuelle (IDI), représentant 20 % du total des primes IDI en vigueur d'Unum (environ 120 millions de dollars). Fortitude Re rétrocedera le risque biométrique à un réassureur mondial hautement noté.
La transaction devrait générer un bénéfice en capital de 100 millions de dollars, composé d'un impact en capital de 200 millions de dollars provenant du bloc LTC et d'un bénéfice de 300 millions de dollars provenant du bloc IDI. Unum maintiendra le service et l'administration pour l'activité réassurée. La clôture est prévue pour 2025, sous réserve des approbations réglementaires et des conditions habituelles.
Unum Group (NYSE: UNM) hat eine bedeutende Rückversicherungstransaktion mit Fortitude Re angekündigt, die am 1. Januar 2025 in Kraft tritt. Die Vereinbarung umfasst die Abtretung von 3,4 Milliarden Dollar an gesetzlichen Rücklagen für langfristige Pflege (LTC), was 19% der gesamten gesetzlichen LTC-Rücklagen entspricht, an die Fortitude Reinsurance Company.
Der Deal beinhaltet auch eine Quotenbeteiligung an individuellen Invaliditätsversicherungen (IDI), die 20% der gesamten laufenden IDI-Prämien von Unum (ca. 120 Millionen Dollar) ausmacht. Fortitude Re wird biometrische Risiken an einen hoch bewerteten globalen Rückversicherer rückversichern.
Es wird erwartet, dass die Transaktion einen Kapitalvorteil von 100 Millionen Dollar generiert, der sich aus einem Kapitalimpact von 200 Millionen Dollar aus dem LTC-Block und einem Vorteil von 300 Millionen Dollar aus dem IDI-Block zusammensetzt. Unum wird den Service und die Verwaltung für das rückversicherte Geschäft aufrechterhalten. Der Abschluss wird für 2025 erwartet, vorbehaltlich der behördlichen Genehmigungen und üblicher Bedingungen.
- Expected $100M capital benefit from the transaction
- Reduces exposure to legacy LTC business by 19%
- Transaction validates LTC block assumptions
- Improves company's risk profile
- Ceding 20% of profitable IDI premium revenue
- Transaction completion subject to regulatory approval risk
- Deal won't close until 2025
Insights
Unum Group's $3.4 billion long-term care reinsurance transaction with Fortitude Re represents a strategically significant move to reduce exposure to its capital-intensive legacy LTC business. This transaction offloads 19% of Unum's total LTC statutory reserves and 20% of its in-force IDI premium, generating an expected $100 million net capital benefit.
The deal addresses one of the market's primary concerns about Unum's business model. Long-term care insurance has been problematic for the entire insurance industry due to historical mispricing, extended policyholder longevity, and high reserve requirements. By reducing LTC exposure, Unum improves its risk profile and frees up capital for more efficient deployment.
Particularly noteworthy is management's statement that the transaction "validates our assumptions for the LTC block." This suggests the reinsurance pricing aligned with Unum's own reserve calculations, potentially alleviating investor concerns about reserve adequacy that have pressured valuation multiples across the LTC insurance space.
The structure of the deal is also favorable - Unum maintains customer relationships by continuing to administer the policies while transferring the underlying risk. This preserves operational continuity while improving the company's capital efficiency ratio.
This transaction follows similar moves by competitors to de-risk legacy LTC exposure and represents a meaningful step in Unum's capital optimization strategy. The freed capital could potentially support increased shareholder returns through dividends or share repurchases, or fund growth in Unum's core employee benefits business, which offers higher returns on invested capital.
This $3.4 billion reinsurance transaction represents a significant strategic win for Unum in its ongoing effort to reduce exposure to the problematic long-term care insurance market. By offloading 19% of its LTC reserves and 20% of its IDI premium, Unum meaningfully improves its risk profile while securing a $100 million capital benefit.
The transaction's structure is particularly advantageous. Unum maintains customer relationships by handling administration while transferring the underlying risk to Fortitude Re, a well-capitalized entity backed by AIG and The Carlyle Group. Fortitude then further distributes mortality and morbidity risk to a highly-rated global reinsurer, creating robust risk protection.
Most revealing is CEO McKenney's statement that the deal "validates our assumptions for the LTC block." This suggests Fortitude's independent valuation aligns with Unum's internal reserve calculations - a significant vote of confidence in Unum's reserving adequacy that should reassure investors concerned about potential reserve shortfalls.
The transaction follows a growing industry trend of insurers seeking to optimize capital by transferring legacy LTC blocks, which typically consume disproportionate capital relative to their contribution to earnings. Companies like Prudential, Genworth, and Manulife have pursued similar strategies.
This deal creates a potential template for Unum to further reduce its remaining LTC exposure through additional transactions. The $100 million capital benefit, while representing a small percentage of Unum's overall capital base, provides flexibility for increased shareholder returns or investments in higher-growth, less capital-intensive business lines that could improve overall ROE.
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Reinsuring
$3.4 billion 19% of total LTC statutory reserves -
Ceding a portion of multi-life individual disability insurance (IDI) business, representing
20% of Unum US in-force IDI premium -
Total transaction expected to drive
$100 million - Significant step in reducing exposure to legacy LTC business
At the closing of the transaction, Unum America will cede
Overall, the transaction is expected to generate an estimated
“The transaction announced today with Fortitude Re is consistent with our strategy of growing a leading employee benefits business while reducing our exposure to the legacy long-term care business. Through this action we further improve our risk profile, decrease the footprint of the closed block, and shift focus towards our more capital efficient, higher-returning core businesses,” said Richard P. McKenney, president and chief executive officer. “The transaction also validates our assumptions for the LTC block, and the actions we have taken over the last several years. We remain committed to our closed block strategy, pursuing opportunities to optimize our capital, and delivering value for our shareholders.”
Members of Unum Group senior management will host a conference call on Thursday, February 27, 2025, at 8:00 a.m. ET to discuss the reinsurance transaction.
To access the conference call, you must register in advance using the following URL: https://registrations.events/direct/Q4I330793. Upon registration, you will receive a dial-in number to use to access the event. It is recommended that you register at least 10 minutes before the start of the event. In addition, a live webcast of the call will be available in a listen-only mode on the company’s investors website at www.investors.unum.com. It is recommended that webcast viewers access the website and opt-in to the webcast approximately 5-10 minutes prior to the start of the call. Following the conference call, a replay of the webcast will be available on the company’s investors website, and a recording of the call will also be available using the registration URL noted above through March 6, 2025.
In conjunction with today’s announcement, a presentation with details of the transaction and additional information is available on the company’s investors website.
Debevoise & Plimpton LLP served as legal counsel to Unum in connection with this transaction.
Forward-Looking Statements
Certain statements in this release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Unum Group and its subsidiaries. Unum Group’s actual results may differ, possibly materially, from expectations or estimates reflected in such forward-looking statements. Certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements can be found in Part 1, Item 1A (Risk Factors) of Unum Group’s Annual Report on Form 10-K for the year ended December 31, 2023. The forward-looking statements in this release speak only as of the date of this release, and Unum Group does not undertake to update any particular forward-looking statement included in this release.
About Unum Group
Unum Group (NYSE: UNM), a leading international provider of workplace benefits and services, has been helping workers and their families thrive for more than 175 years. Through its Unum and Colonial Life brands, the company offers disability, life, accident, critical illness, dental, and vision insurance; leave and absence management support; and behavioral health services. In 2024, Unum Group reported revenues of
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MEDIA
Emily Downing-Baer
edowning@unum.com
INVESTORS
Matt Royal
investorrelations@unum.com
Source: Unum Group
FAQ
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