Fitch upgrades Fortitude Re’s ratings on improved company profile

Core Viewpoint - Fitch Ratings has upgraded Fortitude Re's ratings due to an improved company profile strengthened by strategic transactions, including reinsurance deals that expanded scale and diversified risk exposure [1][3]. Group 1: Rating Upgrades - Fitch upgraded Fortitude Reinsurance Company Ltd. (FRL) and Fortitude Life Insurance & Annuity Company's (FLIAC) Insurer Financial Strength (IFS) ratings to 'A-' from 'BBB+' [3]. - The Issuer Default Ratings (IDRs) for Fortitude Group Holdings, LLC (FGH) and FGH Parent, L.P. were upgraded to 'BBB+' from 'BBB' with a stable outlook [3]. Group 2: Strategic Transactions - Since its sale from AIG in 2020, Fortitude Re has completed 19 transactions, including a $3.4 billion LTC and IDI transaction with Unum Group and a $4 billion annuity reinsurance agreement with Taiyo Life Insurance Company [4]. - Fortitude Re has acquired over $100 billion in total reserves across Bermuda, the U.S., and Asia, holding a 10% global market share in the block reinsurance market, with approximately 26% in Asia and 10% in North America [5]. Group 3: Performance and Growth Expectations - Fortitude Re's reinsurance blocks have largely performed in line with pricing assumptions and expectations [5]. - The company assumed $28 billion of life insurance and annuity reserves in a 2023 transaction with Lincoln National Life Insurance Company and $31 billion of legacy variable annuities from Prudential Financial Inc., both performing well [6]. - Fitch expects Fortitude Re to continue growing through block acquisitions focused on life insurance and annuities in the U.S. and Japan, as well as flow reinsurance transactions and funding-agreement-backed note issuances [7]. Group 4: Key Drivers for Ratings Improvement - Key drivers behind the ratings improvement include Fortitude Re's robust capitalization, effective hedging practices, and advantages from private-equity ownership [8].