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Ellen Cooper, CEO, Lincoln Financial Group

Life Health > Life Insurance > Permanent Life Insurance

Lincoln Financial Makes $28B Life and Annuity Reinsurance Deal

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Lincoln Financial Group today announced a $28 billion reinsurance deal with Fortitude Reinsurance.

The Radnor, Pennsylvania-based life insurer said the deal includes $12 billion in reserves related to its MoneyGuard policies, which offer long-term care benefits tied to life insurance policies, or about 80% of total reserves for in-force MoneyGuard policies.

The deal also includes $9 billion in reserves for universal life policies with secondary guarantees, or 40% of the reserves for that type of business, and $8 billion in reserves for fixed annuities, or 40% of the reserves for the company’s fixed annuities.

What It Means

Ellen Cooper, Lincoln’s CEO, said the Fortitude Re deal will help Lincoln reduce risk levels and improve its capital position.

Fortitude Re

Fortitude Re is backed by a consortium of investors led by the Carlyle Group and T&D Insurance Group.

It now manages life and annuity business backed by $72 billion in reserves. In 2022, it acquired a $31 billion block of variable annuities from Prudential Financial.

It has offices in Brentwood, Tennessee; Jersey City, New Jersey; and Hamilton, Bermuda.

The Deal

The deal is subject to regulatory approvals.

The companies expect Lincoln to administer and service the life insurance policies and annuities involved.

When the deal closes, it should increase Lincoln’s risk-based capital ratio, a measure of risk, by 0.15 percentage points, and increase cash flow by $100 million per year, the company said.

Preliminary Earnings

In related news, Lincoln gave investors an early look at its earnings, which are set to come out May 9.

Lincoln estimated that it will post a net loss of about $904 million to $919 million for the quarter, partly because of new Long Duration Targeted Improvement accounting rules that require it to estimate “mark to market” values for future insurance and annuity benefits and include the changes in quarterly results.

The company expects adjusted operating income for the quarter to be from $250 million to $265 million.

In the first quarter of 2022, Lincoln reported $104 million in net income and $294 million in adjusted operating income on $4.7 billion in total adjusted operating revenue.

Lincoln predicted it will end the first quarter with an RBC ratio of about 377% to 380%, compared with 377% at the end of 2022.

Lincoln CEO Ellen Cooper. (Photo: Lincoln Financial)


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