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Lincoln Financial signs $5.8bn reinsurance deal with Talcott
The transaction is expected to raise annual subsidiary remittances by about $30 million to $40 million over the medium term.
Lincoln Financial has announced a reinsurance agreement with Talcott Financial Group to transfer about $5.8 billion of guaranteed universal life, or GUL, statutory reserves to a Talcott subsidiary.
The insurer said the deal covers approximately 37% of its remaining in-force GUL portfolio and is intended to reduce exposure to long-term mortality, policy lapse, and interest rate risks tied to a legacy block of capital-intensive business.
Lincoln Financial expects the transaction to support future free cash flow generation and enhance shareholder value, forecasting an increase of roughly $30 million to $40 million in annual subsidiary remittances over the medium term.
In addition to the GUL transfer, Lincoln Financial said it will reinsure about $500 million of funding agreement business with a Talcott subsidiary. The company noted that, combined with its 2023 reinsurance agreement with Fortitude Re, about 60% of its total in-force GUL business will be reinsured once the latest transaction is completed, using a mix of coinsurance with funds withheld and modified coinsurance structures.