Fortitude Re's $500 Million Funding Agreement Backed Notes Issuance

Fortitude Re has successfully finalized its second issuance of funding agreement backed notes (FABN) within an eight-month timeline. This transaction involved Fortitude Life Insurance & Annuity Company (FLIAC), which completed a $500 million private placement set to settle by June 12, 2026.

The notes were issued through Fortitude Global Funding, a Delaware statutory trust, boasting a 5.50% interest rate. They are scheduled to mature on June 12, 2031, and have received an A- rating from Fitch Ratings and an A3 rating from Moody’s, reflecting FLIAC’s financial resilience. The FABN market serves as a unique component of asset-backed securities, offering a pathway for insurers to access institutional capital markets beyond conventional methods.

Fortitude Re's initial FABN transaction, settled on October 6, 2025, also valued at $500 million, had a lower 4.625% coupon and a shorter three-year maturity. Fitch recently upgraded its rating on these notes to A- from BBB+, highlighting Fortitude Re’s strong performance within block and flow reinsurance sectors. The strategic features of the new issuance, including its extended maturity and higher coupon rate, underscore a shift towards securing longer-term institutional financing.

Alan Stewart, Treasurer at Fortitude Re, commented on the investor trust evidenced by this second issuance. He noted, "Building on the success of our inaugural transaction, this offering further diversifies our funding sources, enhances financial flexibility, and supports our ability to deliver sustainable value for policyholders, clients, and stakeholders."

Fortitude Re’s focus on funding versatility is apparent in light of its significant reserve expansion. In July 2025, the company finalized a $3.4 billion long-term care reinsurance deal with Unum Group, covering 19% of Unum’s long-term care segment and 20% of its individual disability insurance premium. By the end of 2025, Fortitude Re had amassed over $8 billion in new reserves, necessitating a steady and diversified approach to accessing institutional capital.

Additionally, Fortitude Re has activated several capital channels. Together with Carlyle, the company initiated FCA Re in October 2025, a Bermuda-based reinsurance sideline with assets surpassing $700 million, targeting Asian life and annuity markets. The sidecar gained financial support from key players like T&D Insurance Group, AllianceBernstein, Shinhan Life, and the National Pension Service of Korea, showcasing Fortitude Re's strategy to diversify its revenue streams.

The proceeds from the trust will be employed to purchase a funding agreement from FLIAC, further supporting Fortitude Re’s robust capital framework.