Lincoln cedes $6 billion life reserves block to Talcott
By IAN Editorial Desk – Lincoln Financial today said it had agreed a reinsurance transaction with Talcott Financial Group covering roughly $5.
Lincoln Financial today said it had agreed a reinsurance transaction with Talcott Financial Group covering roughly $5.8 billion of in-force guaranteed universal life statutory reserves, alongside about $500 million of funding agreement business, in a deal valued at around $6 billion overall.
The ceded guaranteed universal life business represents about 37% of Lincoln’s remaining in-force guaranteed universal life block. Talcott said the transaction covers a run-off block of universal life with secondary guarantee policies, as well as the funding agreement liabilities, extending a relationship between the two groups that previously included a variable annuity flow reinsurance transaction announced in 2021.
The arrangement is split between coinsurance with funds withheld and modified coinsurance. A related agreement cited a 60% modified coinsurance deposit and a 40% funds withheld account allocation, showing that Lincoln is not simply transferring the block and supporting assets outright, but using structures under which assets and reserves remain on the ceding company’s balance sheet in defined ways.
That matters for how the transaction is secured and administered. In a funds-withheld structure, the ceding company keeps the assets on its balance sheet in a segregated account backing a funds withheld liability and pays the investment income on those assets to the reinsurer, while the reinsurer records a corresponding receivable. The SEC agreement also says the funds-withheld account was established to secure the reinsurer’s payment liability on the ceding company’s books.
Lincoln will retain account administration, recordkeeping and claims management for the reinsured policies, and said the transaction would not affect its commitments to policyholders or distribution partners. Keeping servicing with the cedant means the customer-facing relationship stays with Lincoln, even as a substantial share of the risk is reinsured.
On capital, the transaction is expected to have an all-in statutory capital impact of about $200 million on a pro forma basis and to reduce Lincoln’s estimated risk-based capital ratio by about 10 percentage points. Lincoln’s first-quarter earnings materials listed its risk-based capital ratio as greater than 420%, and the company said it expected to remain well above its 420% buffer target after the deal closes.
Lincoln said the deal would be funded using a portion of the proceeds from its strategic partnership with Bain Capital. That links the transaction to previously raised capital, rather than requiring a separate new funding source at announcement.
The transaction has an effective date of 1 October and is expected to close in the fourth quarter of 2026, subject to customary closing conditions, including regulatory approvals.
Neither public announcement text cited in the available materials set out the exact over-collateralisation amount or a detailed list of eligible assets for the deal.
Talcott describes itself as an international life insurance group providing risk solutions across the retirement and insurance industry, and its chief executive, Imran Siddiqui, said the deal expands the firm’s partnership with Lincoln.
Sources: news.google.com · businesswire.com
