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Lincoln Financial Announces Reinsurance Transaction with Talcott

LNC
  • Lincoln Financial entered an agreement with Talcott Financial Group to cede approximately $5.8 billion of in-force guaranteed universal life (GUL) statutory reserves, representing 37% of its remaining GUL block.
  • The transaction includes reinsuring an additional $500 million of funding agreement business with a Talcott subsidiary.
  • The deal is structured partly as coinsurance with funds withheld and partly as modified coinsurance, with Lincoln retaining account administration, recordkeeping, and claims management.
  • Combined with a 2023 reinsurance transaction with Fortitude Re, approximately 60% of Lincoln's total in-force GUL will be reinsured upon closing.
  • The transaction has an all-in statutory capital impact of approximately $200 million, expected to reduce Lincoln's RBC ratio by 10 percentage points while maintaining a ratio well above the 420% buffer target.
  • Lincoln expects the transaction to increase annual subsidiary remittances by $30–$40 million over the medium term, strengthening ongoing free cash flow.
  • The transaction is expected to reduce net income due to amortization, though adjusted operating income is not expected to change materially.
  • Lincoln plans to refine its adjusted operating income definition beginning in the fourth quarter of 2026 to exclude amortization of deferred gains or losses from exited business blocks.
  • The transaction is subject to regulatory approvals and is expected to close in the fourth quarter of 2026 with an effective date of October 1, 2026.
  • Wells Fargo served as exclusive financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to Lincoln.