Bermudian-based Fortitude Re announced has signed a $3.8 billion long-term care reinsurance transaction with Unum Life Insurance Company of America.

Upon receipt of regulatory approvals and subject to satisfaction or waiver of certain other customary closing conditions, Unum will recapture from Fairwind Insurance Company, a wholly-owned subsidiary of Unum, an individual long-term care block representing approximately $3.8 billion of statutory reserves, or approximately $4.5 billion of Unum best estimate reserves, and cede the block to Fortitude Re.

The deal further builds on the successful transaction between Fortitude Re and Unum that was announced last year.

Unum will continue to service and administer the reinsured policies. Simultaneously with the closing of the reinsurance transaction with Unum, Fortitude Re will enter into an agreement to retrocede 100 per cent of the LTC insurance risks to a highly rated global reinsurance partner.

Fortitude Re will thereby retain only the underlying spread-based risks associated with this block of business.

“We are pleased to again partner with Unum and value the trust they have placed in our team,” said Kai Talarek, chief growth and optimisation officer, Fortitude Re.

“We also appreciate the support of our strategic partner Carlyle, whose investment expertise helps ensure we optimise the risk-adjusted return of the investments that back the promises we are making to our clients and their policyholders.”

Sidley Austin LLP served as legal counsel to Fortitude Re.